ERHC Energy (ERHE) 10-K 2016 FY Annual report

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-K

☒ Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended September 30, 2016

OR

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period ended: __________________

Commission file number: 000-17325

(Exact name of registrant as specified in its charter)

Colorado	88-0218499
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

5444 Westheimer Road, Suite 1440, Houston, Texas	77056
(Address of Principal Executive Office)	(Zip Code)

713-626-4700

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Exchange Act: None

Securities registered pursuant to Section 12(g) of the Exchange Act: common stock

Check if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes  ☐    No   ☒

Check if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.   Yes  ☐  No    ☒

Check if the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒     No     ☐

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   ☐

Check if the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer.

Large Accelerated Filer    ☐ Accelerated Filer    ☐ Non-Accelerated Filer    ☒

Check if the registrant is a shell company.  Yes  ☐    No  ☒

The aggregate market value of the voting stock held by non-affiliates of the registrant on March 31, 2016 was $2,108,791.

On December 31, 2016, the registrant had  shares of common stock issued and outstanding 952,399,512.

TABLE OF CONTENTS

	PART I	PAGE
Item 1.	Business	4
Item 1A.	Risk Factors	15
Item 1B.	Unresolved Staff Comments	19
Item 2.	Properties	19
Item 3.	Legal Proceedings	20
Item 4.	Submission of Matters to a Vote of Security Holders	21
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities	21
Item 6.	Selected Financial Data	22
Item 7.	Management’s Discussion and Analysis of Financial Condition and Plan of Operations	23
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	28
Item 8.	Financial Statements and Supplementary Data	29
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	53
Item 9A.	Controls and Procedures	53
Item 9B.	Other Information	53
	PART III
Item 10.	Directors and Executive Officers of the Registrant	54
Item 11.	Executive Compensation	58
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	65
Item 13.	Certain Relationships and Related Transactions	66
Item 14.	Principal Accounting Fees and Services	66
	PART IV
Item 15.	Exhibits and Financial Statement Schedules	67
	Signatures	68

1

Forward-Looking Statements

ERHC Energy Inc. (the “Company”) or its representatives may, from time to time, make or incorporate by reference certain written or oral statements which include, but are not limited to, information concerning the Company’s possible or assumed future business activities and results of operations and statements about the following subjects:

· business strategy;

· growth opportunities;

· future development of concessions, exploitation of assets and other business operations;

· future market conditions and the effect of such conditions on the Company’s future activities or results of operations;

· future uses of and requirements for financial resources;

· interest rate and foreign exchange risk;

· future contractual obligations;

· outcomes of legal proceedings;

· future operations outside the United States;

· competitive position;

· expected financial position;

· future cash flows;

· future liquidity and sufficiency of capital resources;

· future dividends;

· financing plans;

· tax planning;

· budgets for capital and other expenditures;

· plans and objectives of management;

· compliance with applicable laws; and

· adequacy of insurance or indemnification.

These types of statements constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and inherently are subject to a variety of assumptions, risks and uncertainties that could cause actual results, levels of activity, performance or achievements to differ materially from those expected, projected or expressed in forward-looking statements.  These risks and uncertainties include, among others, the following:

· general economic and business conditions;

· worldwide demand for oil and natural gas;

· changes in foreign and domestic oil and gas exploration, development and production activity;

· oil and natural gas price fluctuations and related market expectations;

· termination, renegotiation or modification of existing contracts;

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· the ability of the Organization of Petroleum Exporting Countries, commonly called OPEC, to set and maintain production levels and pricing, and the level of production in non-OPEC countries;

· advances in exploration and development technology;

· the political environment of oil-producing regions;

· political instability in the Republic of Kenya, Republic of Chad, the Democratic Republic of Sao Tome and Principe and the Federal Republic of Nigeria;

· casualty losses;

· competition;

· changes in foreign, political, social and economic conditions;

· risks of international operations, compliance with foreign laws and taxation policies and expropriation or nationalization of equipment and assets;

· risks of potential contractual liabilities;

· foreign exchange and currency fluctuations and regulations, and the inability to repatriate income or capital;

· risks of war, military operations, other armed hostilities, terrorist acts and embargoes;

· regulatory initiatives and compliance with governmental regulations;

· compliance with environmental laws and regulations;

· compliance with tax laws and regulations;

· customer preferences;

· effects of litigation and governmental proceedings;

· cost, availability and adequacy of insurance;

· adequacy of the Company’s sources of liquidity;

· labor conditions and the availability of qualified personnel; and

· various other matters, many of which are beyond the Company’s control.

The risks and uncertainties included here are not exhaustive.  Other sections of this report and the Company’s other filings with the U.S. Securities and Exchange Commission (“SEC”) include additional factors that could adversely affect the Company’s business, results of operations and financial performance.  Given these risks and uncertainties, investors should not place undue reliance on our statements concerning future intent.  Company’s statements included in this report speak only as of the date of this report.  The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any of our statements to reflect any change in its expectations with regard to the statement or any change in events, conditions or circumstances on which any forward-looking statement is based.

3

PART I

Item 1 – Business

Overview

ERHC Energy Inc., a Colorado corporation, (“ERHC” or the “Company”) was incorporated in 1986. The Company is in the business of exploration for oil and gas in Africa. The Company’s business includes working interests in exploration acreage in the Republic of Kenya (“Kenya”), the Republic of Chad (“Chad”), the Joint Development Zone (“JDZ”) between the Democratic Republic of Săo Tomé and Príncipe (“STP”), the Federal Republic of Nigeria (“FRN” or “Nigeria”), and the exclusive economic zone of Săo Tomé and Príncipe (the “Exclusive Economic Zone” or “EEZ”).

ERHC’s strategy in Kenya and Chad is to partner with other oil and gas operators to perform exploration work and further develop assets held through Production Sharing Contracts (PSCs) with the governments of both countries.  ERHC plans to raise funds by farming out some working interest in these blocks in exchange for cash payments or other valuable consideration.

The Company’s strategy in the JDZ and EEZ is to farm out its working interests to well established oil and gas operators for valuable consideration including upfront cash payments and being carried for ERHC’s share of the exploration costs.  This has already been done successfully on Blocks 2, 3 and 4 of the JDZ where ERHC has benefited from partnerships with Addax Petroleum and Sinopec Corporation, which have operated some of the license areas on behalf of ERHC.

ERHC is now pursuing a similar approach for JDZ Blocks 5, 6 and 9 as well as for blocks in the EEZ.

Apart from its oil and gas exploration activities in Kenya, Chad, the JDZ and the EEZ, ERHC continues to pursue other oil and gas opportunities in Africa. These opportunities also include the possible acquisition of significant equity stakes in other oil and gas exploration and production companies and the resulting indirect interest in the underlying exploration and production assets of such other companies.

ERHC is currently acquiring oil and gas properties in Texas. These US acquisitions are being carried on by and in the name of NewStar Oil& Gas Company, Inc., a wholly owned subsidiary of ERHC (“NewStar”). NewStar is incorporated under the laws of the State of Texas. The focus of all acquisitions by Newstar will be producing or near-producing properties with significant upside potential.   

4

CURRENT BUSINESS OPERATIONS

REPUBLIC OF KENYA

ERHC Kenya Acreage

In June 2012, after months of negotiations between ERHC and the Government of Kenya, the Government awarded Block 11A for oil and gas exploration and development in Kenya to the Company. On June 28, 2012, the Company announced that it had signed a Production Sharing Contract (PSC) on Block 11A with the Government of Kenya.  A PSC is an agreement that governs the relationship between ERHC (and any future joint-venture partners) and the Government of Kenya in respect of exploration and production in the Block awarded to the Company.  The PSC details, among other things, the work commitments (including acquisition of data, drilling of wells, social projects, etc.), the time frame for completion of the work commitments, production sharing between the parties and the Government, and how the costs of exploration, development and production will be recovered.

By virtue of the PSC, the Company initially acquired a 90% interest in Block 11A, which encompasses 11,950.06 square kilometers or 2.95 million square acres.  The Government of Kenya has a 10% carried participating interest up to the declaration of commerciality and may thereafter acquire an additional 10% interest in the PSC in which case the total Government participation would rise to 20%.

Circle Oil Limited (www.circleoilandgas.com) (“Circle”) acted as finder in ERHC’s acquisition of the Block by facilitating ERHC’s entry into Kenya, including the introduction of Dr. Peter Thuo, ERHC’s Kenya-based geoscientist and technical adviser who provided liaison services in the pursuit of ERHC’s application. Circle’s involvement provided significant efficiencies, including substantial cost savings, in ERHC’s application process.  By virtue of the terms of the business finder’s agreement reached between Circle and ERHC, Circle is entitled to receive a 5% payment on the value of the acquisition accruing to ERHC from the application.  Circle has opted to receive this fee in the form of a carried 5% of ERHC’s total interest in Block 11A.

In October, 2013, ERHC entered into a farm-out agreement with CEPSA Kenya Limited, an affiliate of Compañía Española de Petróleos, S.A.U., an international oil and gas company ("CEPSA"). The farm-out agreement was approved by the Government of the Republic of Kenya during the quarter ended June 30, 2014. Under terms of the agreement, ERHC transferred majority of its interest in Kenya Block 11A as well as operatorship to CEPSA. The farm-out agreement includes a carry and other considerations.

5

Kenya Operations Update

· As previously advised, the Tarach-1 well was always designed as an exploratory well. An exploratory well is drilled purely for information gathering (“exploration”) purposes in an area that is yet unproven with regard to petroleum resources. The site selection for an exploratory well is based on seismic data and other pre-drill geoscientific surveys.

· Operator analysis of the results if the Tarach-1 well shows that it did not encounter any reservoirs. The operator has therefore classified Tarach-1 a dry well. The well has accordingly been plugged and abandoned

It is important to remind investors and other stakeholders, while the pre-drill geological and geophysical work might indicate prospectively and reasonable chances of success, there are no guarantees before drilling that there will be a discovery of hydrocarbons. If there is a discovery, there is no guarantee that it will be commercial or in such quantities as to justify a development project.

The Company continues to work with Deloitte Corporate Finance LLC (DCF) on a further farm-down of our interest in the Block to help raise funds for the company.

Key Provisions of the ERHC’s PSC on Block 11A

KENYA BLOCK 11A

LICENSE:	PSC with the Government of Kenya (effective September 2012)
PARTIES:	ERHC (35%); CEPSA (55%); Government of Kenya (10%)1

WORK PROGRAM:

Phase 1 (2 years – September 2012 to September 2014)

Minimum Work	Minimum Expenditure	Status
Acquire and interpret 1,000 square kilometers of gravity and magnetic data	$250,000	Completed: 14,943.8 line kilometers of FTG data acquired by January 2014 at an estimated total cost of $2,700,000.
Acquire and interpret 1,000 kilometers of 2D seismic data	$10,000,000	Completed: 1,086.6 line kilometers of 2D seismic data acquired by August 2014 at an estimated total cost of $28,300,000

Phase 2 (2 years – September 2014 to September 2016)

Minimum Work	Minimum Expenditure	Status
Acquire 750 square kilometers of 3D seismic data	$30,000,000	Decision taken not to acquire 3D seismic but to proceed to drilling based on FTG and 2D seismic
OR	OR
Drill one (1) well to a minimum depth of 3,000m	$30,000,000	Completed.

Phase 3 (2 years – September 2016 to September 2018)

Minimum Work	Minimum Expenditure	Status
Drill one (1) well to a minimum depth of 3,000m	$30,000,000	Not yet arisen

¹ CEPSA is carrying ERHC’s proportionate share of exploration costs except for the first exploration well where ERHC is expected to contribute 25% of its proportionate (35%) share of costs of the well.

6

OTHER FINANCIAL OBLIGATIONS:

Ministry Training Fund	$175,000 per annum during the exploration period
	$200,000 per annum (minimum) from adoption of first development plan
Social Projects:	$50,000 per annum (minimum)
Surface Rentals:	$5/km2 per annum (exploration phase 1); $10/km2 per annum (exploration phase 2); $15/km2 per annum (exploration phase 3)
	$100/km2 per annum (development and production period)

Cost Recovery:
Cost Oil	Up to 60% of Cost Oil each fiscal year

Profit Oil

Incremental Production Tranches	Government Share	Contractor Share
0-30,000 barrels per day	50%	50%
Next 25,000 barrels per day	60%	40%
Next 25,000 barrels per day	65%	35%
Next 20,000 barrels per day	70%	30%
Above 100,000 barrels per day	78%	22%

7

REPUBLIC OF CHAD

ERHC’s Chad Acreage

On July 6, 2011, the Company announced that it had signed a Production Sharing Contract (PSC) on the three oil blocks with the Government of Chad.  A PSC is an agreement that governs the relationship between ERHC (and any future joint-venture partners) and the Government of Chad in respect of exploration and production in the Blocks awarded to the Company.  The initial period of exploration commenced on July 12, 2012 with the publication, in Chadian Government’s Gazette Principal, of the Exclusive Exploration Authorization, granted to ERHC by the Government of Chad.

During the quarter ended June 30, 2014, the Company received the arrêté (decree) of the President of Chad giving presidential seal of approval to the Company’s request to obtain oil exploration Block BDS 2008 and its voluntary relinquishment of the Manga and Chari-Ouest III Blocks.

8

Chad Operations Update

As of September 30, 2016, ERHC continues to talk with potential farm-in partners. The next stage of exploration is a seismic survey on ERHC’s two focus areas. ERHC is exploring, as one of its funding options, the possibility of a right-to-earn partnership in exchange for seismic services. Based on the result of an aero-magnetic and gravity survey that ERHC completed over the Block, total Petroleum Initially in Place (PIIP) for one of ERHC's two focus areas has been estimated at 278 million barrels (with a high case of 876 million barrels). ERHC holds a 100 percent interest in BDS 2008.

ERHC's exploration team is developing a Request for Proposals for a 2-D seismic acquisition program. The exploration team continues to work on securing regulatory approvals for the seismic program in ERHC's two focus areas. One is north of Esso's Tega and Maku discoveries in the Doseo basin and the other is east of and on trend with OPIC's Benoy-1 margin discovery in the Doba basin.

Focus Areas

ERHC's exploration focus is on Block BDS 2008 which measures 41,800 square kilometers or 10,329,000 acres. Within this block, two focus areas have been identified:

- North of Esso’s Tega and Maku discoveries in the Doseo basin; and

- East of and on trend with OPIC’s Benoy-1 margin discovery in the Doba basin.

Key Provisions of ERHC’s Production Sharing Contract (PSC) in Chad

CHAD BLOCK BDS 2008

LICENSE:	PSC with the Government of Chad signed June 20112
PARTIES:	ERHC (100%)

WORK PROGRAM:

Phase 1 (5 years – June 2012 to June 2017)³

Minimum Work	Minimum Expenditure	Status
Unspecified: annual work program to be proposed yearly by contractor	$15,000,000 in total for the exploration phase	EIA completed;
		Aero gravity and magnetic survey completed;
		·	4,720 line kilometers of high precision gravity and magnetic data acquired by November 2014;
		·	Three leads identified;
		Seismic in preparation;
		·	2D seismic on focus areas planned

² PSC originally covered thee Blocks; ERHC voluntarily relinquished two Blocks in 2013, retaining only BDS 2008.  Relinquishment and retention approved by Presidential Decree as provided for in PSC.

³ PSC provides for exploration period to run from date of grant of Exclusive Exploration Authorization (“EEA”).  EEA granted to ERHC in June 2012.

9

Phase 2 (3 years)

Minimum Work	Minimum Expenditure	Status
Unspecified: annual work program to be proposed yearly by contractor	$1,000,000	ERHC proposes an exploration well in this period if Phase 1 G&G studies justify

OTHER FINANCIAL OBLIGATIONS:
Ministry Training Fund	$250,000 per annum during the exploration period
	$500,000 per annum during the exploitation period
Social Projects:	None specified in the PSC
Surface Rentals	$1/km2 per annum (Exploration Phase 1); $5/ km2 per annum (Exploration Phase 2); $10// km2 per annum (Extension)
	$100/ km2 per annum (Exploitation Phase 1); $150/ km2 per annum (Exploitation Phase 1)

COST RECOVERY AND PRODUCTION SHARING:
Royalty	14.25% for crude oil
	5% for natural gas
Cost Oil	Up to 70% of net production after deduction of royalty

Profit Oil

R-Factor, as defined by the PSC 4	Less than or equal to 2.25	Between 2.25 and 3	Greater than 3
Contractor’s share of profit oil	60%	50%	40%
State’s share of profit oil	40%	50%	60%

⁴ R-factor is based on a formula defined in the PSC.

ERHC’s exploration team has commenced planning toward 2-D seismic acquisition. The information gathered through an airborne gravity/magnetic survey of the Block in Southern Chad proved to be a significant improvement on current data resolution. ERHC's sub-contractor, Bridgeporth Ltd., a specialist geosciences company, completed the survey during the fourth quarter of 2014, confirming the preliminary leads and revealing additional targets. The main conclusions of the study are as follows:

a) The Graben edge is clearly visible in the southwest corner of the Bridgeporth survey.

b) The data can be used to target seismic acquisition over possible rift associated structures.

c) It appears that the Graben edge will enter into the ERHC block northeast of the Bridgeporth survey.

d) Regional profile data acquired by Bridgeporth suggests that the gravity low to the north of BDS 2008 could indeed be a rifted section.

e) The saddle feature in the west central portion of the Block should be investigated.

As the Company did with the JDZ and Kenya Block 11A, ERHC continues to explore a farm-out to spread risk. The Chad acreage is also within the scope of Deloitte Corporation Finance LLC (DCF)'s engagement and ERHC continues to work with DCF to find suitable farm-out or joint venture partners.

10

NIGERIA – SAO TOME AND PRINCIPE JOINT DEVELOPMENT ZONE (“JDZ”)

Background of the JDZ

In the spring of 2001, Sao Tome & Principe and Nigeria signed a treaty establishing a JDZ for the joint development of petroleum and other resources in the overlapping area of their respective maritime boundaries.  The treaty also established an administrative body, the Joint Development Authority (“JDA”), to administer the treaty and all activities in the JDZ. Revenues derived from the JDZ will be shared 60:40 between the governments of Nigeria and Săo Tomé & Príncipe, respectively. The JDZ lies approximately 180 kilometers south of Nigeria, in the Gulf of Guinea, one of the most prolific hydrocarbon regions of the world.     .

ERHC’s Rights in the JDZ

In April 2003, the Company and STP entered into an Option Agreement (the “2003 Option Agreement”) in which the Company relinquished significant prior legal rights and financial interests in the Joint Development Zone (“JDZ”) in exchange for preferential exploration rights in the JDZ.  Following the exercise of ERHC’s rights as set forth in the 2003 Option Agreement, the JDA confirmed the award in 2004 of participating interests (“Original Participating Interest”) in each of JDZ Blocks 2, 3, 4, 5, 6 and 9 of the JDZ during the 2004/5 licensing round conducted by the JDA.  ERHC also jointly bid with internationally recognized technical partners for additional participating interests in the JDZ during the 2004/5 licensing round.  As a result of the joint bid, ERHC won additional participating interests (“Joint Bid Participating Interest”) in Blocks 2, 3 and 4.  The following is a tabulation of ERHC’s participating interests in the JDZ.

JDZ Block	ERHC Original Participating Interest		ERHC Joint Bid Participating Interest		Participating Interest(s) Assigned		Current ERHC Retained Participating Interest
2		30.00%		35.00%		43.00%		22.00%
3		20.00%		5.00%		15.00%		10.00%
4		25.00%		35.00%		40.50%		19.50%
5		15.00%		-		-	15.00% (in arbitration)
6		15.00%		-		-	15.00% (in arbitration )
9		20.00%		-		-		20.00%

ERHC’s Participating Agreements in the JDZ

The following are the particulars of the Participating Agreements by which ERHC assigned some of its participating interests in JDZ Blocks 2, 3 and 4 to technical partners so that the technical partners would operate the Blocks and carry ERHC’s proportionate share of costs in the Blocks until production, if any, commenced from the Blocks:

Date of Participation Agreement	Party(ies) to the Participation Agreement	Participating Interest(s) Assigned			Participating Interest Assigned Price
JDZ Block 2 - Participation Agreement - ERHC Retained Interest of 22.00%
March 2, 2006	Sinopec International Petroleum Exploration Production Co. Nigeria Ltd - a subsidiary of Sinopec International Petroleum and Production Corporation		28.67	%	$	13,600,000
	Addax Energy Nigeria Limited - an Addax Petroleum Corporation subsidiary		14.33	%	$	6,800,000
JDZ Block 3 - Participation Agreement - ERHC Retained Interest of 10.00%
February 15, 2006	Addax Petroleum Resources Nigeria Limited - a subsidiary of Addax Petroleum Corporation		15.00	%	$	7,500,000
JDZ Block 4 - Participation Agreement - ERHC Retained Interest of 19.50%
November 15, 2005	Addax Petroleum Nigeria (Offshore 2) Limited - a subsidiary of Addax Petroleum Corporation		40.50	%	$	18,000,000

11

Under the terms of the Participation Agreements Sinopec and Addax agreed to pay all of ERHC’s future costs for petroleum operations (“the carried costs”) in respect of ERHC's retained interests in the blocks.  Additionally, Sinopec and Addax are entitled to 100% of ERHC’s allocation of cost oil plus up to 50% of ERHC’s allocation of profit oil from the retained interests on individual blocks until Sinopec and Addax Sub recover 100% of ERHC’s carried costs.

On or about October 2, 2009, Sinopec International Petroleum Exploration and Production Corporation acquired all of the outstanding shares of Addax Petroleum Corporation

ERHC’s JDZ Acreage

ERHC has working interests in six of the nine Blocks in the JDZ, as follows:

· JDZ Block 2:  22.0%

· JDZ Block 3:  10.0%

· JDZ Block 4:  19.5%

· JDZ Block 5:  15.0% (in arbitration)

· JDZ Block 6:  15.0% (in arbitration)

· JDZ Block 9:  20.0%

The working interest percentages represent ERHC’s share of all the hydrocarbon production from the blocks and obligates ERHC to pay a corresponding percentage of the costs of drilling, production and operating the blocks.  Through Exploration Phase 1 in blocks 2, 3 and 4, these costs have been carried by the operators.  The operators can only recover their costs by carrying ERHC until production whereupon the operators will recover their costs from production revenues.

In 2009, Sinopec and Addax, ERHC's technical partners and operators in Blocks 2, 3 and 4 undertook an exploratory drilling campaign across the three blocks that was completed in January 2010.

Biogenic gas was discovered in each block and discussions continue between the Joint Development Authority and the parties, including ERHC, that hold interests in JDZ Blocks 2, 3 and 4, regarding drilling results. The meetings with the JDA are aimed at reaching a definitive agreement on how to proceed with the next stage of exploration in the Blocks following the expiration of Exploration Phase I in March 2012.

JDZ Operations Update

The JDZ partnership is currently assessing the data for possible new exploration play concepts in this area. As of September 30, 2016The Nigeria - São Tomé and Príncipe Joint Development Authority (JDA) continues to engage with the remaining JDZ contracting parties, including ERHC, on the way forward for further exploration.

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SAO TOME AND PRINCIPE EXCLUSIVE ECONOMIC ZONE (“EEZ”)

Overview of ERHC’s EEZ Blocks

The Săo Tomé and Príncipe EEZ is delineated over an expanse of waters offshore Săo Tomé and Príncipe that covers approximately 160,000 square kilometers.  In terms of hydrocarbon exploration and exploitation, the EEZ is a frontier region that sits south of the Niger Delta and west of the Gabon salt basin, retaining similarities with each of those prolific hydrocarbon regions.  The regional seismic database comprises approximately 12,000 kilometers of seismic data. Interpretation of that seismic data shows numerous structures in the EEZ that have similar characteristics to known hydrocarbon accumulations in the area.

ERHC’s Rights in the EEZ

Under a 2001 agreement with the Government of Săo Tomé and Príncipe (“STP”), ERHC was vested with the rights to participate in exploration and production activities in the EEZ.  These rights included (a) the right to receive up to 100% of two blocks of ERHC’s choice and (b) the option to acquire up to a 15% paid working interest in each of two additional blocks of ERHC’s choice in the EEZ.  In 2010, ERHC exercised its rights to receive up to 100% of two blocks of ERHC’s choice in the EEZ and was duly awarded Blocks 4 and 11 of the EEZ by the Government of STP.

EEZ Block 4 is 5,808 square kilometers, situated directly east of the island of Príncipe.  The northeastern area near EEZ Block 4 contains a large graben structure, which is bound by the Kribi Fracture Zone.

EEZ Block 11 totals 8,941 square kilometers, situated directly east of the island of Săo Tomé and abuts the territorial waters of Gabon. The southern area of the EEZ, where EEZ Block 11 is situated, contains parts of the Ascension and Fang Fracture Zones.

ERHC will decide whether to take up the option to acquire up to a 15% paid working interest in each of two additional blocks of the EEZ when called upon to exercise the option by the Government of STP in accordance with the agreements which provide for the rights and option.

PSC for the EEZ Block 11

In July 2014, ERHC and the National Petroleum Agency of Săo Tomé and Príncipe (ANP-STP) announced the conclusion of final terms for the Production Sharing Contract for EEZ Block 11.

A PSC is an agreement that governs the relationship between the Company (and its joint venture partners) and the Government of Săo Tomé and Príncipe in respect of exploration and production in any Block awarded to the Company.  The PSC spells out, among other things, the work commitments (including acquisition of data, drilling of wells, social projects, etc.), the time frames for accomplishing the work commitments, how production will be shared between the parties and the government, and how the costs of exploration, development and production will be recovered.

In October 2015, the Company reached an agreement with Kosmos Energy (NYSE: KOS), a leading independent oil and gas exploration and production company focused on frontier and emerging areas to transfer all ERHC's rights to Block 11 of the São Tomé and Principe Exclusive Economic Zone (EEZ) to Kosmos. The agreement has been approved by the National Petroleum Agency of Sao Tome & Principe ("ANP-STP") as required in the requisite Production Sharing Contract ("PSC") for EEZ Block 11.

EEZ Operations Update

ERHC has concluded negotiation of the terms of a Production Sharing Contract with the National Petroleum Agency of São Tomé and Principe (ANP-STP) for Block 4. The Company is currently in discussions with potential farm in partners. ERHC holds a 100 percent interest in EEZ Block 4, and 15% right to paid working interest in each of two additional blocks of the EEZ.

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INVESTMENT IN OANDO ENERGY RESOURCES (FORMERLY EXILE RESOURCES)

During the year ended September 30, 2011, ERHC invested $1,350,000 in Exile Resources Inc, a company listed on the Toronto Stock Exchange (Ventures Exchange) stock in open market purchases.  ERHC’s intention was to gain an indirect interest in Exile’s underlying oil and gas exploration and production assets as well as the ability to participate in Exile’s decision making in respect of those assets.  ERHC was particularly interested in Exile’s carried interest in the proven Akepo field in the Niger Delta.

In July 2011, Oando Petroleum and Exploration Company (“Oando Petroleum”) commenced a reverse takeover (“RTO”) of Exile Resources.  In July 2012, Exile announced the completion of the RTO by Oando Petroleum and the change of name of the resultant company to Oando Energy Resources Inc, (“Oando Energy”). It also announced the listing of the company’s shares under the symbol “OER” on the Toronto Stock Exchange (TSX) and commencement of trading in the shares on the TSX from July 30, 2012.

During the year ended September 30, 2016, ERHC’s investment in the common stock of Oando Energy Resources, Inc. (“OER”), a Canadian oil and gas company that trades on the Toronto Stock Exchange (TSX) was purchased by the majority shareholder of OER, pursuant to a shareholder approved buyout.

CURRENT PLANS FOR OPERATIONS

ERHC’s principal assets are its interests in rights for exploration for hydrocarbons in Kenya, Chad, the JDZ and the EEZ. ERHC has no current sources of income from its operations. The Company plans to develop its business by the acquisition of other assets which may include revenue-producing assets in diverse geographical areas and the forging of strategic, new business partnerships and alliances.  ERHC cannot currently predict the outcome of negotiations for acquisitions, or, if successful, their impact on the Company's operations.

PLANS FOR FUNDING EXISTING ASSETS AND POTENTIAL NEW ACQUISITIONS

ERHC's future plans will depend on the Company's ability to attract new funding. The Company is implementing a series of steps to fund the geophysical work, including magnetic/gravity and seismic surveys, prior to securing potential farm-out on Chad acreage. Said funding steps include but are not limited to the issuance of a series of convertible notes, which the Company has commenced, issuance of shares of common stock through registered direct offerings, which the Company plans to commence shortly and farm-outs to potential partners on its assets in Africa. The fund raising might include:

· Farm-outs of part of the Company’s assets in Kenya, Chad and the Săo Tomé and Príncipe Exclusive Economic Zone

· Issue shares of common stock through a registered direct offering

· Other available financing options

The Company is continuing discussions with several international investment advisory and financial brokerage firms to act as financial advisors and intermediaries to ERHC. While ERHC has always used expert professional assistance to formulate and execute its capital raising initiatives, it is re-focusing on the retention of such advisors and intermediaries as a strategic imperative of the increased funding requirements that arise from the rollout of the new work programs in Chad and Kenya.  The new firms retained will perform such financial advisory and investment banking services for the Company as are customary and appropriate in transactions of this type, including assisting the Company in analyzing, structuring, negotiating and effecting proposed capital raises.  These initiatives may include any transaction or series of transactions in which one or more capital providers (existing or otherwise) commits debt capital to the Company, purchases equity of the Company (or securities of the Company convertible into equity), or alternatively funds the Company either directly or through farm-ins, farm-outs or other arrangements in which the capital provider earns an interest in oil and gas properties of the Company.

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UPDATES AND INFORMATION

ERHC’s website at http://www.erhc.com contains information about the Company’s operations, assets, and initiatives and a FAQ page that is frequently updated to address the latest questions.

The Company provides free of charge on our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable.

SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549.  The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  Also, the SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the SEC.  The public can obtain any documents that we file with the SEC at h http://www.sec.gov after we electronically file such material with, or furnish it to, the SEC.

Item 1A. Risk Factors

You should carefully consider the risks described below before making any investment decision related to the Company’s securities.  The risks and uncertainties described below are not the only ones facing the Company.  Additional risks and uncertainties not presently known or that the Company currently deems immaterial also may impair its business operations.  If any of the following risks actually occur, the Company’s business could be affected.

The Company has no sources of revenue and a history of losses from operations

The Company’s business is in an early stage of development.  The Company has not generated any operating revenue since its entry into the oil and gas industry and has historically incurred significant operating losses.  The Company may continue to incur operating losses for the foreseeable future. As such, the Company is subject to significant risks and may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect its business. The Company’s financial statements as of September 30, 2016 have been prepared on the assumption that the Company will continue as a going concern. The Company’s business requires significant financial resources.  The ability of the Company to continue as a going concern is dependent on raising additional capital to fund its exploration projects and for other working capital requirements. There can be no assurance that the Company will be successful in its efforts to raise additional financing or if financing is available, that it will be on terms acceptable to the Company.

The Company has a limited operating history in the oil and gas industry

The Company’s operations have consisted solely of acquiring rights to working interests in Kenya, Chad, the JDZ and the EEZ and entering into production sharing contracts.  The Company may not be the operator with respect to these contracts.  The Company’s future financial results depend primarily on (1) the ability of the Company or its venture partners to provide or obtain sufficient financing to meet their financial commitments in the production sharing contracts, (2) the ability to discover commercial quantities of oil and gas, and (3) the market price for oil and gas.  Management cannot predict if or when the production sharing contracts will result in future wells being drilled or if drilled, whether oil and/or gas will be discovered in commercial quantities.

Financing may be needed to fund the financial commitments of the production sharing contracts

The Company’s failure or the failure of the Company’s venture partners to provide or obtain the necessary financing may preclude the continuation of exploration activities which would adversely affect the value of its concessions in Kenya, Chad, the JDZ and the EEZ.

The Company may not discover commercially productive reserves in Kenya, Chad, the JDZ or the EEZ

The Company’s future success depends on its ability to economically discover oil and gas reserves in commercial quantities in Kenya, Chad, the JDZ, and/or the EEZ.  There can be no assurance that the Company’s planned projects in Kenya, Chad, the JDZ or the EEZ will result in significant, if any, reserves or that the Company and its partners will have future success in drilling productive wells.

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The Company’s non-operator status limits its control over oil and gas projects in Kenya, Chad, the JDZ and the EEZ

The Company will focus primarily on creating exploration opportunities and forming relationships with oil and gas companies to develop those opportunities in Kenya, Chad, the JDZ and the EEZ.  As a result, the Company may have only a limited ability to exercise control over a significant portion of a project’s operations and the associated costs of those operations in Kenya, Chad, the JDZ or the EEZ.  The success of a future project is dependent upon a number of factors that may be outside the Company’s control.  These factors include:

· the availability of future capital resources to the Company and the other participants for drilling additional wells;

· the approval of the Company or other participants for determining well locations and drilling time-tables;

· the economic conditions at the time of drilling, including the prevailing and anticipated price of oil and gas; and

· the availability and cost of land based and/or deep water drilling rigs and the availability of operating personnel.

The Company’s reliance on its consortium partners and its limited ability to directly control future project costs could have a material adverse effect on its future rates of return.

The Company’s success depends on its ability to exploit its limited assets

The Company’s primary assets are rights to working interests in exploration acreage in Kenya, Chad, the JDZ and the EEZ under agreements with the Government of Kenya, Chad, the JDA and DRSTP.  The Company’s operations have been limited to managing and sustaining its rights under these agreements.  The Company’s viability depends on its ability to exploit these assets.  However, there is no assurance that it will be successful.

The Company is subject to Government Regulation over which it has no control

In the event the Company begins direct exploration and exploitation of hydrocarbons, it will be required to make necessary expenditures to comply with applicable health and safety, environmental and other regulations.

The oil and gas industry is subject to various types of regulations throughout the world.  Legislation affecting the oil and gas industry has been pervasive and is under constant review for amendment or expansion. Pursuant to such legislation, numerous government agencies have enacted extensive laws and regulations binding on the oil and gas industry and companies engaged in this industry, some of which carry substantial penalties for failure to comply.  Such laws and regulations have a significant impact on oil and gas exploration, production and marketing and midstream activities.  These laws and regulations increase the cost of doing business and, consequently, will affect results of operations.

In as much as new legislation affecting the oil and gas industry is commonplace and existing laws and regulations are frequently amended or reinterpreted, the Company is unable to predict the future cost or the impact of complying with such laws and regulations.  However, the Company does not expect that any of these laws and regulations will affect its operations in a manner materially different from that in which they would affect other oil and gas companies of similar size and scope of operations.

Having interests outside the United States requires the Company to comply with United States laws and other laws in foreign jurisdictions related to pursuing, owing, and exploiting foreign investments, agreements and other relationships.  The Company is subject to all such laws, including, but not limited to, the Foreign Corrupt Practices Act of 1977 (“FCPA”).

The Company’s competition includes oil and gas conglomerates that have significant advantages over it

The oil and gas industry is highly competitive. Many companies are engaged in exploring for crude oil and natural gas and acquiring crude oil and natural gas properties, resulting in significant competition for desirable exploratory and producing properties.  The companies with which the Company competes are much larger and have greater financial resources and technical expertise than the Company.

Various factors beyond the Company’s control will affect prices of oil and gas

The availability of a ready market for the Company’s future crude oil and natural gas production if any depends on numerous factors beyond its control, including the cyclical nature of the price of crude oil and natural gas, the level of consumer demand, the extent of worldwide crude oil and natural gas production, the costs and availability of alternative fuels, the costs and proximity of transportation facilities, regulation by authorities and the costs of complying with applicable environmental and other regulations.

The Company’s business interests are located outside of the United States which subjects it to risks associated with international activities beyond its control.

At September 30, 2016, the Company’s major assets are located outside the United States.  The Company’s primary assets are cash in various financial institutions and agreements with Kenya, Chad, the DRSTP and the JDA, which provide ERHC with rights to participate in exploration and production activities in Kenya, Chad, the EEZ and the JDZ.  Production is subject to political risks which are inherent in all foreign operations.  The Company’s ability to exploit its interests in this area pursuant to such agreements may be adversely impacted by this circumstance.

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The future success of the Company’s international operations may also be adversely affected by risks associated with international activities, including economic and labor conditions, political instability, risk of war, expropriation, termination, renegotiation or modification of existing contracts, tax laws (including host-country import-export, excise and income taxes and United States taxes on foreign subsidiaries) and changes in the value of the U.S. dollar relative to the local currencies in which future oil and gas producing activities may be denominated.  Changes in exchange rates may also adversely affect the Company’s future results of operations and financial position.

In addition, to the extent the Company engages in operations and activities outside the United States, it is subject to the Foreign Corrupt Practices Act (the “FCPA”) which, among other restrictions, prohibits U.S. companies and their intermediaries from making payments to foreign officials for the purpose of obtaining or keeping business or otherwise obtaining favorable treatment, and requires companies to maintain adequate record-keeping and internal accounting practices to accurately reflect their financial and other transactions with foreign officials.  The FCPA applies to companies, individual directors, officers, employees and agents.  The FCPA also applies to foreign companies and persons taking any action in furtherance of such payments while in the United States.  Under the FCPA, U.S. companies may also be held liable for actions taken by strategic or local partners or representatives.

The FCPA imposes civil and criminal penalties for violations of its provisions.  Civil penalties may include fines of up to $500,000 per violation, and equitable remedies such as disgorgement of profits causally connected to the violation (including prejudgment interest on such profits) and injunctive relief.  Criminal penalties for violations of the payments provisions could range up to the greater of $2 million per violation or twice the gross pecuniary gain sought by making the payment, and/or incarceration for up to 5 years per violation.  Moreover, if a director, officer or employee of a company is found to have willfully violated the FCPA books and records provisions, the maximum penalty would be imprisonment for 20 years per violation.  Maximum fines of up to $25 million may also be imposed for willful violations of the books and records provisions by a company.

The Company’s business interests are located in Kenya, Chad and in the Gulf of Guinea offshore Africa and are subject to the volatility of foreign governments

The Company’s primary assets are located in Kenya, Chad and in the Gulf of Guinea, offshore Africa.  The Governments of Kenya, Chad, Nigeria and the island nation of Sao Tome and Principe granted ERHC participation interests in various concessions in their lands and offshore waters.  The Governments of Kenya, Chad, Nigeria and Sao Tome and Principe exist in a volatile political and economic environment and the Company is subject to all the risks associated with those governments.  These risks include, but are not limited to:

· Loss of future revenue and concessions as a result of hazards such as war, acts of terrorism, insurrection and other political risks;

· Increases in taxes and governmental interests;

· Unilateral renegotiation of contracts by government entities;

· Difficulties in enforcing our rights against a governmental agency because of the doctrine of sovereign immunity and foreign sovereignty over international operations;

· Changes in laws and policies governing operations of foreign-based companies, and

· Currency restrictions and exchange rate fluctuations.

The Company’s foreign operations may also be adversely affected by laws and policies of the United States affecting foreign trade and taxation. Realization of any of these factors could materially and adversely affect our financial position, results of operations and cash flows.

The Company has filed suit to prevent tampering with its interest and any adverse ruling related to JDZ Blocks 5 and 6. This action could have a material adverse effect on ERHC’s business, prospects, operations, financial condition and cash flow.

The Company’s rights in JDZ Blocks 5 and 6 are currently the subject of legal proceedings at the London Court of International Arbitration and the Federal High Court in Abuja, Nigeria. The Company instituted both proceedings in November 2008 against the JDA and the Governments of Nigeria and Săo Tomé and Príncipe.  The Company seeks legal clarification that its rights in the two Blocks remain intact.

The issue in contention is contractual. The Company was awarded a 15 percent working interest in each of the Blocks in a 2004/5 bid/licensing round conducted by the JDA following the Company’s exercise of preferential rights in the Blocks as guaranteed by contract and treaty.  The JDA and the Government of STP contend that certain correspondence issued by a previous CEO/President of the Company in 2006 amount to a relinquishment of the Company’s rights in Blocks 5 and 6 under the Company’s contracts with STP which provide for the rights.  The Company contends that no such relinquishment has occurred and has sought recourse to arbitration accordingly. It also filed the suit to prevent any tampering with its said rights in JDZ Blocks 5 and 6 pending the outcome of arbitration.

Proceedings on the suit and the arbitration are currently suspended while the Company pursues amicable settlement with the Governments of Nigeria and Săo Tomé & Príncipe.

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The Company has limited sources of working capital

The Company is currently focused on consolidating and exploiting its interests in Kenya, Chad, JDZ Blocks 2, 3, 4, 5, 6 and 9 and has limited working capital.

As described in more detail in “Item 7 Future Capital Requirements” of this Form 10-K, the Company’s minimum working capital requirements in 2017 will be approximately $13,100,000.

If ERHC is unable to successfully raise capital to cover its planned operations or negotiate participation agreements with operating and other partners in, Chad and the EEZ, the Company’s cash resources could be strained and the Company’s future plans curtailed.

The Company’s results of operations are susceptible to general economic conditions

The Company’s revenues and results of operations will be subject to fluctuations based upon the general economic conditions both in the United States and internationally.  A general economic downturn or a recession in the industry, will adversely impact the Company’s prospective future revenues, the value of its oil and natural gas exploration concession, as well as its ability to exploit its assets.

The Company’s stock price is highly volatile

The Company’s common stock is currently traded on the Over-the-Counter (OTC) Bulletin Board.  The market price of the Company’s common stock has experienced fluctuations that are unrelated to its operating performance.  The market price of the common stock has been highly volatile over the last several years.  The Company can provide no assurance regarding its stock price.

The Company does not currently pay dividends on its common stock and does not anticipate doing so in the near future

The Company has paid no cash dividends on its common stock, and there is no assurance that the Company will achieve sufficient earnings to pay cash dividends on its common stock in the foreseeable future.  The Company intends to retain any earnings to fund its future operations.

The Company’s stock is considered a “penny stock”

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in “penny stocks.”  Penny stocks generally are equity securities with a share price of less than $5.00.  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market.  These disclosure requirements may have the effect of reducing the level of trading activity in any secondary market for a stock that becomes subject to the penny stock rules.  The Company’s common stock may be subject to the penny stock rules, and accordingly, investors in the common stock may find it difficult to sell their shares in the future, if at all.

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Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Republic of Kenya

The Company initially held a 90% interest in Block 11A, which encompasses 11,950.06 square kilometers or 2.95 million square acres.  The Government of Kenya has a 10% carried participating interest up to the declaration of commerciality and may thereafter acquire an additional 10% interest in the PSC in which case the total Government participation would rise to 20%.  Circle Limited, which acted as ERHC’s finder in the acquisition of ERHC’s interest in the Block is entitled to 5% of ERHC’s interest as agreed finder’s fee.

In October, 2013, the Company entered into a farm-out agreement with CEPSA Kenya Limited, an affiliate of Compañía Española de Petróleos, S.A.U., an international oil and gas company ("CEPSA"). Under the terms of this agreement, the Company assigned and transferred 55% of its participating interest in Kenya Block 11A to CEPSA.

In exchange for the transferred rights, CEPSA will carry the Company's proportionate share of obligations and financial costs under the terms and conditions outlined in the farm-out agreement. The agreement was approved in January 2014 by the Kenyan Government and from February 2014, CEPSA took over from ERHC as operator under the production sharing contract ("PSC") for Kenya Block 11A.

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Republic of Chad

On July 6, 2011, the Company announced that it had signed a Production Sharing Contract (PSC) on the three oil blocks with the Government of Chad.  The initial period of exploration commenced on July 12, 2012 with the publication, in Chadian Government’s Gazette Principal, of the Exclusive Exploration Authorization, granted to ERHC by the Government of Chad.

ERHC subsequently offered to novate the PSC by retaining only the BDS2008 Block and relinquishing the Manga and Chari Ouest III Blocks to the Chadian government for efficiency.  The Chadian Ministry of Energy and Petroleum approved the novation of the PSC and ERHC received the Presidential decree of approval in March 2014.  The BDS 2008 Block has an area of 16,360 square kilometers or 4,042,644 acres.

Joint Development Zone

ERHC has interests in six of the nine Blocks in the Joint Development Zone (JDZ), a 34,548 sq. km area approximately 200 km off the coast of Nigeria and Sao Tome and Principe that is adjacent to several large petroleum discovery areas. ERHC’s rights in the JDZ include:

· JDZ Block 2:  22.0%

· JDZ Block 3:  10.0%

· JDZ Block 4:  19.5%

· JDZ Block 5:  15.0% (in Arbitration)

· JDZ Block 6:  15.0% (in Arbitration)

· JDZ Block 9:  20.0%

Sao Tome and Principe Exclusive Economic Zone

ERHC holds the following working interests and rights in the EEZ:

· EEZ Block 4: 100%  working interest and no signature bonus

· EEZ Block 11: 100% working interest and no signature bonus

· The option to acquire up to a 15% paid working interest in additional two blocks of ERHC’s choice.

ERHC will be responsible for its proportionate share of exploration and exploitation costs in the EEZ blocks.

Corporate Office

The Company’s corporate office is located at 5444 Westheimer Road, Suite 1440, Houston, Texas 77056 pursuant to a lease that expires in July 2017.

Item 3. Legal Proceedings

JDZ Blocks 5 and 6

Arbitration and Lawsuit

The Company's rights in JDZ Blocks 5 and 6 are currently the subject of legal proceedings at the London Court of International Arbitration and the Federal High Court in Abuja, Nigeria. The Company instituted both proceedings in November 2008 against the JDA and the Governments of Nigeria and Săo Tomé and Príncipe.  The Company seeks legal clarification that its rights in the two Blocks remain intact.

The issue in contention is contractual. The Company was awarded a 15 percent working interest in each of the Blocks in a 2004/5 bid/licensing round conducted by the JDA following the Company's exercise of preferential rights in the Blocks as guaranteed by contract and treaty.  The JDA and the Government of STP contend that certain correspondence issued by a previous CEO/President of the Company in 2006 amount to a relinquishment of the Company's rights in Blocks 5 and 6 under the Company's contracts with STP which provide for the rights.  The Company contends that no such relinquishment has occurred and has sought recourse to arbitration accordingly. It also filed the suit to prevent any tampering with its said rights in JDZ Blocks 5 and 6 pending the outcome of arbitration.

Suspension of Proceedings on the Arbitration and Lawsuit

Proceedings on the suit and the arbitration are currently suspended while the Company pursues amicable settlement with the Governments of Nigeria and Săo Tomé Príncipe.

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Routine Claims

From time to time, ERHC may be subject to routine litigation, claims, or disputes in the ordinary course of business.  ERHC intends to defend these matters vigorously; the Company cannot predict with certainty, however, the outcome or effect of any of the litigation or investigatory matters specifically described above or any other pending litigation or claims.  There can be no assurance as to the ultimate outcome of these lawsuits and investigations.

Item 4. Submission of Matters to a Vote of Security Holders

None.

PART II

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

Market and Related Information

ERHC’s common stock is currently traded on the OTC Bulletin Board under the symbol “ERHE.”  The market for the Company’s common stock is unpredictable and highly volatile.  The following table sets forth the closing sales price per share of the common stock for the past three fiscal years.  These prices reflect inter-dealer prices, without retail mark-ups, markdowns or commissions, and may not necessarily represent actual transactions.

Stock Price Highs & Lows

	High		Low
	(Price per share)
Fiscal Year 2016
First Quarter	$	0.002	$	0.001
Second Quarter	$	0.440	$	0.014
Third Quarter	$	0.090	$	0.033
Fourth Quarter	$	0.055	$	0.006
Fiscal Year 2015
First Quarter	$	0.053	$	0.070
Second Quarter	$	0.023	$	0.001
Third Quarter	$	0.003	$	0.001
Fourth Quarter	$	0.004	$	0.001

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As of December 31, 2016, there were approximately 2,200 stockholders of record.  The closing price of the common stock as reported on the OTC Bulletin Board on December 31, 2016 was $0.0002. The Company has not paid any dividends during the last three fiscal years and does not anticipate paying any cash dividends in the foreseeable future.

Securities Authorized for Issuance under Equity Compensation Plans

In November 2004, the Board of Directors adopted a 2004 Compensatory Stock Option Plan pursuant to which it reserved 20,000,000 shares for issuance.  This plan was approved at a special meeting of the stockholders of the Company in February 2005.  Under this plan, 14,681,756 shares have been authorized.

	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders		4,150,000		0.20		5,318,244
Equity compensation plans not approved by security holders		-		-		-

Recent Sales of Securities Exempt from Registration

None.

Issuer Purchases of Equity Securities

The Company has not repurchased any of its Common Stock.

Item 6. Selected Financial Data

Not applicable.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Plan of Operations

Introduction

The following discussion and analysis presents management’s perspective of the Company’s business and, financial condition and its overall performance. This information is intended to provide investors with an understanding of our past performance, current financial condition and outlook for the future. You must read the following discussion of the results of the operations and financial condition of the Company in conjunction with its financial statements, including the notes thereto included in this Form 10-K filing.  The Company’s historical results are not necessarily an indication of trends in operating results for any future period.

Reference is made to “Item 6. Selected Financial Data” and “Item 8. Financial Statements and Supplementary Data.”

The business of exploring for, developing, or acquiring oil and gas assets is capital intensive and the Company expects to continue to make significant capital expenditures over the next several years as part of its long-term growth strategy.  The Company has no revenue from current operations and its existing cash and cash equivalents are finite.  It is anticipated that external financing will be required in the future to fund the Company’s intended acquisition and exploration programs.

Possible sources of funding include private or public financings (including possible rights offering, registered direct offerings or private placements of the Company’s capital stock), strategic relationships or other arrangements.  While ERHC has obtained funding for operations from private equity placements in the past, there is no assurance that the Company will be able to do so again in the near future at commercially reasonable terms or at all despite any progress in its business prospects.  At the Company’s current stage of development, public or private debt funding may not be available on acceptable terms or at all.  If ERHC enters into strategic relationships to raise additional funds, it might be required to relinquish certain rights to its assets and/or future revenue streams from any prospective resource plays.

Failure to raise capital or secure financing when needed could leave ERHC with insufficient resources in the future to sustain its exploration and development activities.  Without additional capital resources, the Company may be forced to limit, defer or cease acquisitions or capital expenditures, sell assets, cede acreage or acquired interest, reduce operating expenses, or delay or reduce planned exploration and development programs, which in turn may adversely affect the Company’s financial condition and business prospects.  Raising any additional funds through equity or debt financing, convertible debt financing, joint ventures with corporate partners or other sources may be dilutive to the Company’s existing shareholders and may affect the price of its common stock.  Ultimately, there can be no assurance that ERHC will be successful in obtaining additional financing to fund its growth.

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CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This Annual Report on Form 10-K contains forward-looking statements.  Forward-looking statements include statements concerning plans, objectives, goals, strategies, expectations, future events or performance and underlying assumptions and other statements which are other than statements of historical facts.  Certain statements contained herein are forward-looking statements and, accordingly, involve risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements.  Our expectations, beliefs and projections are expressed in good faith and are believed by us to have a reasonable basis, including without limitations, management's examination of historical operating trends, data contained in our records and other data available from third parties, but there can be no assurance that management's expectations, beliefs or projections will result or be achieved or accomplished.  In addition to other factors and matters discussed elsewhere herein and the risks discussed in      Item 1A.  Risk Factors   , the following are important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements: geopolitical instability where we operate; our ability to meet our capital needs; our ability to raise sufficient capital and/or enter into one or more strategic relationships with one or more industry partners to execute our business plan; our ability and success in finding, developing and acquiring oil and gas reserves; our ability to respond to changes in the oil exploration and production environment, competition, and the availability of personnel in the future to support our activities.

Overview

ERHC Energy Inc., a Colorado corporation, (“ERHC” or the “Company”) was incorporated in 1986.  The Company’s business is the exploration and exploitation of oil and gas resources in Africa including its rights to working interests in exploration acreage in the Republic of Kenya (“Kenya”), in the Republic of Chad (“Chad”), in the Joint Development Zone (“JDZ”) between the Democratic Republic of Săo Tomé and Príncipe (“STP”) and the Federal Republic of Nigeria (“FRN or “Nigeria”) and in the exclusive economic zone of Săo Tomé (the “Exclusive Economic Zone” or “EEZ”).

A description of the Company’s current operations is contained in  Item 1 of this Form 10-K and readers are encouraged to read that analysis in connection with  Management’s Discussion and Analysis of Financial Condition and Plan of Operations.

In recent years ERHC has been focused on identifying opportunities in Africa that works to its strengths and leverage the experience gained through the Company's long term involvement in the JDZ and EEZ.

Critical Accounting Policies

The Company has identified the policies below as critical to its business operations and the understanding of its results of operations.  The impact and any associated risks related to these policies on the Company’s business operations are discussed throughout this section where such policies affect the Company’s reported and expected financial results.  Management’s preparation of this Annual Report on Form 10-K requires it to make estimates and assumptions that affect the reported amount of assets and liabilities, and the disclosure of contingent assets and liabilities.  There is no assurance that actual results will not differ from those estimates and assumptions.

Concentration of Risks

The Company’s current focus is to exploit assets consisting of working interests in agreements with Kenya, Chad, the DRSTP and JDA concerning oil and gas exploration.  The Company has developed internal capabilities and is also forming relationships with other oil and gas companies with the technical and financial capabilities to assist the Company in leveraging its interests in Kenya, Chad, the EEZ and the JDZ.  The Company currently has no other operations.

Impairment of Long-lived Assets

ERHC evaluates the recoverability of long-lived assets when events and circumstances indicate that such assets might be impaired.  ERHC determines impairment by comparing the undiscounted future cash flows estimated to be generated by these assets to their respective carrying amounts.  Impairments are charged to operations in the period to which events and circumstances indicate that such assets might be impaired.  ERHC has evaluated its investment in interests in Kenya, Chad, its DRSTP concession, and its JDA interests in light of its 2003 Option Agreement and there have been no events or circumstances that would indicate that such assets might be impaired.

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Recent Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ASU 2015-03 “Simplifying the Presentation of Debt Issuance Costs” (ASU 2015-03). ASU 2015-03 changes the presentation of debt issuance costs in financial statements. Upon adoption of ASU 2015-03, debt issuance costs will be reported in the balance sheet as a direct deduction from the related debt liability rather than as an asset. We adopted ASU 2015-03 retrospectively during the year ended September 30, 2016.  As a result, $19,664 and $61,710 of debt issuance costs were recorded as a reduction of total debt at September 30, 2016 and September 30, 2015, respectively.

In March, 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. For public business entities, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For all other entities, the amendments are effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any entity in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period.

In March, 2016, the FASB issued ASU No. 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments (a consensus of the Emerging Issues Task Force). For public business entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. For entities other than public business entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.

In March, 2016, the FASB issued ASU No. 2016-07, Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. Effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Earlier application is permitted.

In May, 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The amendments in this Update affect the guidance in Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements for Topic 606 (and any other Topic amended by Update 2014-09). Accounting Standards Update 2015-14,Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year.

In August, 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments(a consensus of the Emerging Issues Task Force). Effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period.

25

Results of Operations

Year Ended September 30, 2016 Compared with Year Ended September 30, 2015

General and administrative expenses decreased from $2,828,685 in the year ended September 30, 2015 to $2,413,404 in the year ended September 30, 2016.  The decrease was primarily due to decrease in general and administrative expenses as part of our cost savings plan.

Exploration expense increased from $1,425,592 in year ended September 30, 2015 to $10,510,061 in the year ended September 30, 2016. The increase was primarily due to exploration cost related to Tarach-1 well in Kenya Block 11A started during the year 2016.

During the year ended September 30, 2016, we had a net loss of $12,046,858 compared with a net loss of $6,631,403 for the year ended September 30, 2015.  The increase in net loss was primarily due to increase in exploration cost of $9,084,469 and loss of $841,948 recognized from sale of investment in common stock of Oando Energy Resources, which offset by decrease in interest expenses of $2,099,464 and loss on embedded derivative of $629,631 related to our convertible debts during the year ended September 30, 2016 compared the same period in 2015.

Liquidity

Year Ended September 30, 2016 Compared with Year Ended September 30, 2015

Net cash used by operating activities during the year ended September 30, 2016 was $4,744,786, an increase of $2,351,471 from cash used by operating activities of $2,393,315 in the year ended September 30, 2015.  This increase was primarily due to increase in payable of exploration expense related to Tarach-1 well in Kenya Block 11A started during the year 2016.

Net cash provided by investing activities during the year ended September 30, 2016 was $3,991,906, a change of $3,766,284 from cash provided by investing activities of $225,622 for the year ended September 30, 2015.  The change in cash used in investing activities was primarily due to the increase in proceeds from sales of EEZ Block 11 interest in oil and gas concessions of $4,000,000 for the year ended September 30, 2016.

Net cash provided by financing activities during the year ended September 30, 2016 was $435,111, a decrease of $307,489 from $742,600 in the year ended September 30, 2015.  This decrease was primarily due to less proceeds from convertible debts were issued during the year ended September 30, 2016 compared to the same period in 2015.

Capital Resources

Our working capital (defined as current assets minus current liabilities) has historically been generated primarily from the following sources: investing cash flow (proceeds from sale of partial interest in DRSTP and Kenya concessions) and financing cash flows (proceeds from sale of common stock under various arrangements).

As of September 30, 2016, the Company had $439,544 in cash and cash equivalents and working capital deficit of $12,596,993.  We are implementing a series of steps to fund the deficits. The fund raising might include:

• Farm-outs of part of the Company's assets in Kenya, Chad and the Săo Tomé and Príncipe Exclusive Economic Zone

• Issue shares of common stock through a registered direct offering

• Convertible loans and other debt instruments

• Other available financing options

26

Assets Carried at Fair Value

The Company holds common stock and warrant investments (collectively “Marketable Equity Securities”) in Oando Energy Resources, Inc. (formerly Exile Resources, Inc.) which is a publicly traded company listed on the Toronto Stock Exchange. These assets are carried at fair market value in ERHC’s financial statements.  Both stocks and warrants are accounted for as available for sale securities, and changes in their fair value are recognized in other comprehensive income (loss).  The Company relies on an independent broker to provide fair values for its investments.   Management believes that changes in fair value of the above mentioned assets do not have a material effect on liquidity or capital resources.

Off-Balance Sheet Arrangements

At September 30, 2016, the Company had no off-balance sheet arrangements.

Short –Term Obligations

As of September 30, 2016, the Company had a total of $13,066,042 in short-term obligations. These short-term obligations include accounts payable of $9,273,608, account payable – related party of $100,438, income tax payable of $2,739,607, $181,535 in convertible short term notes payable and $770,854 of short term derivative liability.

Contractual Obligations and Commercial Commitments

The following table provides information at September 30, 2016, about the Company’s contractual obligations and commercial commitments.  The table presents contractual obligation by due dates and related contractual commitments by expiration dates.

Contractual Obligations	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
Kenya license interest	$		$		$	-	$	-	$	-
Chad license interest (1)		14,081,800		250,000		4,250,000		9,581,800		-
Operating lease (2)		110,968		110,968						-
Total	$	14,192,768	$	360,968	$	4,250,000	$	9,581,800	$	-

(1) This represents obligations under our PSC with Chad. The Company has a $15,000,000 commitment under a five year work program. Furthermore, the Company is contractually obligated to pay annual Surface Area Fees, estimated to be $16,360 per year during the Initial Exploration Period.

(2) Lease obligations consist of operating lease for office space. Office lease represent non-cancelable leases for office space used in daily operations.

27

Contingencies and Legal Matters

For a detailed discussion of contingencies and legal matters, see “Item 3 Legal Proceedings”.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

At September 30, 2016, all the Company’s oil and gas exploration acreages were located outside the United States.  The Company’s primary assets are agreements with Government of the Republic of Kenya, the Republic of Chad, the DRSTP and the JDA, which provide ERHC with rights to participate in exploration and production activities in the Republic of Kenya, the Republic of Chad, and in Gulf of Guinea off the coast of West Africa.  This geographic area of interest is controlled by foreign governments that have historically experienced volatility, which is out of management’s control. The Company’s ability to exploit its interests in the agreements in this area may be impacted by this circumstance.

The future success of the Company’s international operations may also be adversely affected by risks associated with international activities, including financial, economic and labor conditions, political instability, risk of war, expropriation, renegotiation or modification of existing contracts, tax laws (including host-country import-export, excise and income taxes and United States taxes on foreign subsidiaries) and changes in the value of the U.S. dollar relative to the local currencies in which future oil and gas producing activities may be denominated.  Furthermore, changes in exchange rates may adversely affect the Company’s future results of operations and financial condition.

Market risks relating to the Company’s operations result primarily from changes in interest rates as well as credit risk concentrations.  The Company’s interest expense is generally not sensitive to changes in the general level of interest rates in the United States, particularly because a substantial majority of its indebtedness is at fixed rates.

28

Item 8. Financial Statements and Supplementary Data

ERHC ENERGY INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page(s)
Report of Independent Registered Public Accounting Firm on the Financial Statements for the Year ended September 30, 2016	30
Report of Independent Registered Public Accounting Firm on the Financial Statements for the Year ended September 30, 2015	31
Consolidated Financial Statements:
Consolidated Balance Sheets as of September 30, 2016 and 2015	32
Consolidated Statements of Operations for the Years Ended September 30, 2016 and 2015	33
Consolidated Statements of Comprehensive Income for the Years Ended September 30, 2016 and 2015	34
Consolidated Statements of Shareholders’ Equity for the Years Ended September 30, 2016 and 2015	35
Consolidated Statements of Cash Flows for the Years Ended September 30, 2016 and 2015	36
Notes to Consolidated Financial Statements	37
Financial Statement Schedules

All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under instructions or are inapplicable and therefore have been omitted.

29

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

ERHC Energy Inc.

We have audited the accompanying consolidated balance sheet of ERHC Energy Inc. and its subsidiaries (collectively the “Company”) as of September 30, 2016, and the related consolidated statements of operations, other comprehensive loss, changes in shareholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The consolidated financial statements of ERHC Energy Inc. and subsidiaries as of September 30, 2015, were audited by other auditors whose report dated December 22, 2015 (except for Note 1, 2 and 7, which is as May 10, 2016) expressed an unqualified opinion on those statements.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ERHC Energy Inc. and its subsidiaries as of September 30, 2016, and the results of its operations, other comprehensive loss, changes in shareholders’ equity, and cash flows for the period described above in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has insufficient working capital, which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ M&K CPAS, PLLC

www.mkacpas.com

Houston, Texas

January 19, 2017

30

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders’ of

ERHC Energy Inc.

Houston, Texas

We have audited the accompanying consolidated balance sheet of ERHC Energy Inc. and its subsidiaries   (collectively the “Company”) as of September 30, 2015 and the related consolidated statement of operations, other comprehensive loss, changes in shareholders' equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the accompanying consolidated financial statements of the Company present fairly, in all material respects, their consolidated financial position as of September 30, 2015, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.

As discussed in Note 2 to the consolidated financials, the 2015 financial statements have been restated to reflect an adjustment related to income taxes.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred a net loss and working capital deficit, which raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty

/s/ MaloneBailey, LLP

MaloneBailey, LLP

Houston, Texas

December 22, 2015, except for Note 1, 2 and 6, which is as May 10, 2016

31

ERHC ENERGY INC.

CONSOLIDATED BALANCE SHEETS

As of September 30, 2016 and 2015

	2016			2015
				(As restated)
ASSETS
Current assets:
Cash and cash equivalents	$	439,544		$	757,313
Investment in Oando Energy Resources		-			211,699
Prepaid expenses and other		29,505			207,636
Total current assets		469,049			1,176,648
Oil and gas properties and concession fees		5,683,819			6,016,014
Furniture and equipment, net of accumulated depreciation of $509,894 and $445,626 at September 30, 2016 and 2015, respectively		70,081			133,349
Total assets	$	6,222,949		$	7,326,011
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	9,273,608		$	942,833
Accounts payable – related parties		100,438			46,250
Convertible note payable, net – short term		181,535			191,540
Federal income tax payable		2,739,607			2,739,607
Derivative liability – short term		770,854			725,898
Total current liabilities		13,066,042			4,646,128
Convertible note payable, net – long term		-			2,874
Total liabilities		13,066,042			4,649,002
Commitments and contingencies:
Shareholders’ equity:
Preferred stock, par value $0.0001; authorized 10,000,000 shares; none issued and outstanding		-			-
Common stock, par value $0.0001; authorized 3,000,000,000 shares; issued and outstanding 47,479,975 and 29,216,038 shares at September 30, 2016 and 2015, respectively		4,748			2,922
Additional paid-in capital		107,436,940			106,047,738
Accumulated other comprehensive loss		-			(1,135,728	)
Accumulated deficits		(114,284,781	)		(102,237,923	)
Total shareholders’ (deficit) equity		(6,843,093	)		2,677,009
Total liabilities and shareholders’ equity	$	6,222,949		$	7,326,011

The accompanying notes are an integral part of these consolidated financial statements.

32

ERHC ENERGY INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended September 30, 2016 and 2015

	Year Ended September 30,
	2016			2015
				(As restated)
Costs and expenses:
General and administrative	$	2,413,404		$	2,828,685
Exploration expenses		10,510,061			1,425,592
Depreciation		64,268			77,038
Gain on sale of interest in oil and gas concession, net		(2,727,805	)		(239,515	)
Total costs and expenses		10,259,928			4,091,800
Other income and (expenses):
Gain on conversion of note payable to common stock		56,020			-
Interest income		683			2,062
Loss on change in fair value of derivatives		(248,204	)		(105,951	)
Loss on embedded derivative		(394,661	)		(1,024,292	)
Loss on available for sale securities		(844,521	)		(2,573	)
Gain on insurance recovery for loss on deposit		-			1,046,862
Interest expense		(356,247	)		(2,455,711	)
Total other income and (expense)		(1,786,930	)		(2,539,603	)
Loss before for income taxes		(12,046,858	)		(6,631,403	)
Benefit (provision) for income taxes:
Current		-			-
Deferred		-			-
Total benefit (provision)for income taxes		-			-
Net loss	$	(12,046,858	)	$	(6,631,403	)
Net loss per common share –basic and diluted	$	(0.32	)	$	(0.38	)
Weighted average number of common shares outstanding - basic and diluted		37,530,452			17,276,986

The accompanying notes are an integral part of these consolidated financial statements.

33

ERHC ENERGY INC.

CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE LOSS

For the Years Ended September 30, 2016 and 2015

	Year Ended September 30,
	2016			2015
				(As restated)
Net loss	$	(12,046,858	)	$	(6,631,403	)
Other comprehensive income (loss):
Unrealized loss on available for sale securities		-			(457,130	)
Less reclassification of loss on available for sale equity securities		1,135,728			-
Total other comprehensive income (loss)		1,135,728			(457,130	)
Total other comprehensive loss	$	(10,911,130	)	$	(7,088,533	)

The accompanying notes are an integral part of these consolidated financial statements.

34

ERHC ENERGY INC.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

For the Years Ended September 30, 2016 and 2015

	Common Stock				Additional Paid-In			Accumulated			Accumulated Other Comprehensive
	Shares		Amount		Capital			Deficit			Income			Total
Balance at September 30, 2014 (As restated)		7,651,941	$	765	$	101,156,061		$	(95,606,520	)	$	(678,598	)	$	4,871,708
Common stock issued for services		2,100		-		8,400			-			-			8,400
Common stock issued for convertible debts-related party		928,254		93		249,907			-			-			250,000
Derivative liabilities extinguished on conversion – related party		-		-		432,646			-			-			432,646
Common stock issued for convertible debts		20,633,744		2,064		1,726,306			-			-			1,728,370
Derivative liabilities extinguished on conversion		-		-		2,474,418			-			-			2,474,418
Unrealized loss on available for sale equity securities		-		-		-			-			(457,130	)		(457,130	)
Net loss		-		-		-			(6,631,403	)		-			(6,631,403	)
Balance at September 30, 2015 (As restated)		29,216,038		2,922		106,047,738			(102,237,923	)		(1,135,728	)		2,677,009
Common stock issued for convertible debts		18,220,277		1,822		429,241			-			-			431,063
Derivative liabilities extinguished on conversion		-		-		959,965			-			-			959,965
Reclassification of loss on available for sale equity securities		-		-		-			-			1,135,728			1,135,728
Fractional shares issued		43,660		4		(4	)		-			-			-
Net loss		-		-		-			(12,046,858	)		-			(12,046,858	)
Balance at September 30, 2016		47,479,975	$	4,748	$	107,436,940		$	(114,284,781	)	$	-		$	(6,843,093	)

The accompanying notes are an integral part of these consolidated financial statements

35

ERHC ENERGY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended September 30, 2016 and 2015

	Year Ended September 30,
	2016			2015
				(As restated)
Cash flows from operating activities:
Net loss	$	(12,046,858	)	$	(6,631,403	)
Adjustments to reconcile net loss to net cash provided by/(used by) operating activities:
Depreciation and depletion expense		64,268			77,038
Loss on embedded derivative		394,661			1,024,292
Loss on change in fair value of derivatives		248,204			105,951
Loss on debt penalties		-			34,467
Gain on sale of  interest in oil and gas concession		(2,727,805	)		(239,515	)
Amortization of convertible debt discount		233,720			2,023,979
Amortization of debt issuance cost		81,971			247,669
Stock issued for services		-			8,400
Realized loss on available for sale securities		844,521			2,573
Changes in operating assets and liabilities:
Prepaid expenses and other		207,569			211,719
Accounts payable and other accrued liabilities		7,900,775			695,265
Accounts payable – related party		54,188			46,250
Net cash used by operating activities		(4,744,786	)		(2,393,315	)
Cash Flows From Investing Activities
Purchase of oil and gas properties		(510,000	)		(9,779	)
Proceeds from sale of interest in oil and gas concession		4,000,000			239,515
Proceeds from sale of available for sale securities		502,906			-
Purchase of furniture and equipment		(1,000	)		(4,114	)
Net cash provided by investing activities		3,991,906			225,622
Cash flows from financing activities:
Debt origination fees		-			(69,200	)
Payment on convertible debt principle		(37,500	)		(46,200	)
Proceeds from convertible debt, related party		-			250,000
Proceeds from convertible debt, net of expense		472,611			608,000
Net cash provided by financing activities		435,111			742,600
Net decrease in cash and cash equivalents		(317,769	)		(1,425,093	)
Cash and cash equivalents at beginning of period		757,313			2,182,406
Cash and cash equivalents at end of period	$	439,544		$	757,313
Supplemental disclosure of cash flow information:
Interest paid	$	-		$	-
Income taxes paid	$	-		$	-
Non-cash investing and financing activities:
Unrealized loss in Investment Oando Energy Resources	$	-		$	(457,130	)
Discount from derivative	$	756,717		$	1,480,777
Conversion of note payable to common stock – related party	$	-		$	250,000
Conversion of note payable to common stock	$	431,063		$	1,728,370
Derivative liabilities extinguished on conversion – related party	$	-		$	432,646
Derivative liabilities extinguished on conversion	$	959,965		$	2,474,418
Recognition of loss on available for sale securities	$	1,135,728		$	-
Issuance of fractional shares from stock split	$	4		$	-

 The accompanying notes are an integral part of these consolidated financial statements

36

ERHC ENERGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

Note 1 – Summary of Significant Accounting Policies

General Business and Nature of Operations

ERHC Energy Inc. ("ERHC", the “Company”) is an independent oil and gas company formed in 1986, as a Colorado corporation.  The Company’s current focus is to exploit its primary assets, which are rights to working interests in exploration acreage in the Republic of Kenya (“Kenya”), in the Republic of Chad ("Chad"), in the Joint Development Zone (“JDZ”) between the Democratic Republic of Sao Tome and Principe (“DRSTP”), in the Federal Republic of Nigeria (“FRN”) and in the exclusive waters of Sao Tome (the “Exclusive Economic Zone” or “EEZ”).  The Company has formed relationships with upstream oil and gas companies to assist the Company in exploiting its assets in the JDZ as further described in Note 6.

ERHC is currently acquiring oil and gas properties in Texas. These US acquisitions are being carried on by and in the name of NewStar Oil& Gas Company, Inc., a wholly owned subsidiary of ERHC (“NewStar”). NewStar is incorporated under the laws of State of Texas. The focus of all acquisitions by Newstar will be producing or near-producing properties with significant upside potential.

Principles of Consolidation

The consolidated financial statements include the accounts of ERHC and its wholly owned subsidiaries, after elimination of all significant inter-company accounts and transactions.

Use of Estimates

The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period for the years then ended. Actual results could differ significantly from those estimates.

Concentration of Risks

ERHC primarily maintains its finances with seven financial institutions. From time to time the amount on deposit in one or all of these institutions may exceed federal insurance limits.  The balances are maintained in demand accounts to minimize risk.

ERHC’s focus is to exploit its assets which are agreements with the Government of Kenya concerning oil and gas exploration in Kenya, with the Government of Chad concerning oil and gas exploration in Chad, with the DRSTP concerning oil and gas exploration in EEZ and with the JDA concerning oil and gas exploration in the JDZ.  In the past, ERHC has formed relationships with Sinopec International Petroleum Exploration and Production Corporation Nigeria (“Sinopec”), and Addax Energy Nigeria Limited (“Addax Ltd.”) to assist ERHC in leveraging its interests in the JDZ. ERHC currently has no other operations.

Going Concern

The accompanying financial statements have been prepared on the basis that the Company will continue as a going concern which contemplates the realization of assets and the satisfaction of liabilities in the ordinary and usual course of business. As of September 30, 2016, the Company has a working capital deficit and negative cash flows from operating activities. The Company also has significant tax arrears which resulted from a deduction disallowance made by an IRS audit of ERHC’s 2006 return, which audit lasted nearly seven years and has been previously disclosed.  There is an outstanding IRS lien imposed on ERHC in Harris County, Texas in consequence.  Furthermore, the Company is in significant arrears of cash calls relating to the company’s proportionate share of drilling costs (beyond operator-carried expenses) on the Tarach-1 well in Kenya Block 11A. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on raising additional capital to fund ongoing exploration projects and ultimately on attaining future profitable operations. The Company is continuing with its plan to further seek new opportunity for farm-out its assets in Kenya, Chad and the Săo Tomé and Príncipe Exclusive Economic Zone. Management believes that the Company’s current operating strategy will provide the opportunity for the Company to continue as a going concern as long as the Company continues to obtain additional financing; however there is no assurance that this will occur. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company has restated its previously issued consolidated financial statements for the years ended September 30, 2015 and 2014 to reflect emergent developments related to income tax following the completion of an Internal Revenue Service tax audit of the Company’s 2006 tax return.

This restatement is necessitated by the Internal Revenue Service disallowing certain deductions on ERHC’s 2006 tax return.  The disallowance resulted from stock based compensation expense that the Company had recognized as a deductible expense in its 2006 tax return. The disallowance was the outcome of an Internal Revenue Service audit of ERHC’s 2006 return, which audit lasted nearly seven years and has been previously disclosed.  As such, the consolidated financial statements for the years ended September 30, 2015 and 2014 have been restated to properly reflect the tax liabilities that should have been recorded in 2006.

Cash Equivalents

ERHC considers all highly liquid short-term investments with an original maturity of three months or less, when purchased, to be cash equivalents.

37

Investment in Oando Energy Resources (OER)

The Company's investments in common stock and warrants are carried at market value.  Both stocks and warrants are accounted for as available for sale securities, and changes in their fair value are recognized in other comprehensive income (loss).

Furniture, Fixtures and Equipment

Furniture, fixtures and equipment are stated at cost and include expenditures for renewals and improvements and capitalized interest. Maintenance and repairs are charged to current operations. When property is retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts, and any gain or loss on disposition is included in income. Depreciation is provided principally on the straight-line method over the estimated service lives of the assets. In general, office furniture is depreciated over 7 years, office equipment over 5 years and computer equipment over 3 years.

Successful Efforts

ERHC uses the successful efforts method of accounting for oil and gas producing activities.  Under this method, acquisition costs for proved and unproved properties are capitalized when incurred.  Exploration costs, including geological and geophysical costs, the costs of carrying and retaining unproved properties and exploratory dry hole drilling costs, are expensed.  Development costs, including the costs to drill and equip development wells and successful exploratory drilling costs to locate proved reserves are capitalized. Exploratory drilling costs are capitalized when incurred pending the determination of whether a well has found proved reserves.  A determination of whether a well has found proved reserves is made after drilling is completed. The determination is based on a process that relies on interpretations of available geologic, geophysics, and engineering data.  If a well is determined to be successful, the capitalized drilling costs will be reclassified as part of the cost of the well.  If a well is determined to be unsuccessful, the capitalized drilling costs will be charged to expense in the period the determination is made.  If an exploratory well requires a major capital expenditure before production can begin, the cost of drilling the exploratory well will continue to be carried as an asset pending determination of whether proved reserves have been found only as long as: i) the well has found a sufficient quantity of reserves to justify its completion as a producing well if the required capital expenditure is made and ii) drilling of the additional exploratory wells is under way or firmly planned for the near future.  If drilling in the area is not under way or firmly planned, or if the well has not found a commercially producible quantity of reserves, the exploratory well is assumed to be impaired, and its costs are charged to expense.

In the absence of a determination as to whether the reserves that have been found can be classified as proved, the costs of drilling such an exploratory well is not carried as an asset for more than one year following completion of drilling.  If, after that year has passed, a determination that proved reserves exist cannot be made, the well is assumed to be impaired, and its costs are charged to expense.  Its costs can, however, continue to be capitalized if sufficient quantities of reserves are discovered in the well to justify its completion as a producing well and sufficient progress is made in assessing the reserves and the well’s economic and operating feasibility.

The impairment of unamortized capital costs is measured at a lease level and is reduced to fair value if it is determined that the sum of expected future net cash flows is less than the net book value. ERHC determines if impairment has occurred through either adverse changes or as a result of the annual review of all fields.

Development costs of proved oil and gas properties, including estimated dismantlement, restoration and abandonment costs and acquisition costs, are depreciated and depleted on a field basis by the units-of-production method using proved developed and proved reserves, respectively. The costs of unproved oil and gas properties are generally combined and impaired over a period that is based on the average holding period for such properties and the Company’s experience of successful drilling.

Impairment of Long-lived Assets

ERHC evaluates the recoverability of long-lived assets when events and circumstances indicate that such assets might be impaired.  ERHC determines impairment by comparing the undiscounted future cash flows estimated to be generated by these assets to their respective carrying amounts.  Impairments are charged to operations in the period to which events and circumstances indicate that such assets might be impaired.  ERHC has evaluated its investments located in Republic Kenya, Republic of Chad and in its DRSTP concession fee in light of its 2003 Option Agreement (see Note 6 and there have been no events or circumstances that would indicate that such assets might be impaired).

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Income Taxes

Income taxes are accounted for under the assets and liability method.  Under this method, the deferred tax assets and liabilities are estimated based upon the difference between the financial statement and tax bases of assets and liabilities using tax rates in effect for the year in which the Company expects the differences to affect taxable income. The tax consequences of most events recognized in the current year’s financial statements are included in determining income taxes currently payable. However, because tax laws and financial accounting standards differ in their recognition and measurement of assets, liabilities, equity, revenues, expenses, gains and losses, differences arise between the amount of taxable income and pretax financial income for a year and between the tax bases of assets or liabilities and their reported amounts in the financial statements. Because the Company assumes that the reported amounts of assets and liabilities will be recovered and settled, respectively, a difference between the tax basis of an asset or a liability and its reported amount in the balance sheet will result in a taxable or a deductible amount in some future years when the related liabilities are settled or the reported amounts of the assets are recovered, which gives rise to a deferred tax asset. The Company must then assess the likelihood that the deferred tax assets will be recovered from future taxable income and to the extent the Company believes that recovery is not likely, the Company must establish a valuation allowance.

The Company estimates the provision for income taxes based on income before income taxes for each tax jurisdiction in which the Company has established operations. The Company does not provide incremental U.S. income taxes on un-remitted foreign earnings taxed at rates less than the U.S. tax rates as such earnings are considered permanently invested.

The Company follows the FASB guidance on accounting for uncertainty in income taxes which provides a financial statement recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return. Under this guidance, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The guidance also extends to de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and income tax disclosures.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period.  Diluted loss per share is computed by dividing net loss by the weighted average number of shares outstanding, after giving effect to potentially dilutive common share equivalents outstanding during the period.  Potentially dilutive common share equivalents are not included in the computation of diluted loss per share if they are anti-dilutive.  Diluted loss per common share is the same as basic for all periods presented because the effect of potentially dilutive common shares arising from outstanding stock warrants and options was anti-dilutive. For the years ended September 30, 2016 and 2015, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

Stock-based Compensation

ERHC recognizes compensation costs resulting from the issuance of stock-based awards to employees and directors over the requisite period based on the fair value of each stock award on the grant date.

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Recent Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ASU 2015-03 “Simplifying the Presentation of Debt Issuance Costs” (ASU 2015-03). ASU 2015-03 changes the presentation of debt issuance costs in financial statements. Upon adoption of ASU 2015-03, debt issuance costs will be reported in the balance sheet as a direct deduction from the related debt liability rather than as an asset. The Company adopted ASU 2015-03 retrospectively during the year ended September 30, 2016.  As a result, $19,664 and $61,710 of debt issuance costs recorded as direct deduction from the carrying amount of the outstanding debt at September 30, 2016 and September 30, 2015, respectively.

In March, 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. For public business entities, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For all other entities, the amendments are effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any entity in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period.

In March, 2016, the FASB issued ASU No. 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments (a consensus of the Emerging Issues Task Force). For public business entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. For entities other than public business entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.

In March, 2016, the FASB issued ASU No. 2016-07, Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. Effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Earlier application is permitted.

In May, 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The amendments in this Update affect the guidance in Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements for Topic 606 (and any other Topic amended by Update 2014-09). Accounting Standards Update 2015-14,Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year.

In August, 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments(a consensus of the Emerging Issues Task Force). Effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period.

Reclassifications

Certain amounts in the financial statements as of and for the year ended September 30, 2015 have been reclassified to conform with the adoption. Such reclassifications have no impact on net loss, shareholders’ equity or cash flows as previously reported.

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Note 2 – Restatement of Financial Statements

The Company has restated its previously issued consolidated financial statements for the years ended September 30, 2015 to reflect emergent developments related to income tax following the completion of an Internal Revenue Service tax audit of the Company’s 2006 tax return.

This restatement is necessitated by the Internal Revenue Service disallowing certain deductions on ERHC’s 2006 tax return.  The disallowance resulted from stock based compensation expense that the Company had recognized as a deductible expense in its 2006 tax return. The disallowance was the outcome of an Internal Revenue Service audit of ERHC’s 2006 return, which audit lasted nearly seven years and has been previously disclosed.  As such, the consolidated financial statements for the year ended September 30, 2015 has been restated to properly reflect the tax liabilities that should have been recorded in 2006.

The effect of the restatement on the September 30, 2015 consolidated financial statements as follows:

	September 30, 2015 (As restated)
	As Previously Reported			Adjustment			As Restated
Income tax payable	$	-		$	2,739,607		$	2,739,607
Total current liabilities	$	1,906,521		$	2,739,607		$	4,646,128
Total liabilities	$	1,909,395		$	2,739,607		$	4,649,002
Accumulated deficits	$	(99,498,316	)	$	(2,739,607	)	$	(102,237,923	)
Total shareholders’ equity	$	5,416,616		$	(2,739,607	)	$	2,677,009
Provision for income taxes	$	2,018,533		$	(2,018,533	)	$	-
Net loss	$	8,649,936		$	(2,018,533	)	$	6,631,403
Total other comprehensive loss	$	9,107,066		$	(2,018,533	)	$	7,088,533

Note 3 - Fair Value of Financial Instruments

Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Level inputs are as follows:

· Level 1 Inputs—Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

· Level 2 Inputs—Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.

· Level 3 Inputs—Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity's own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

Interest income on cash and cash equivalents is recognized as earned on the accrual basis.

Investments in equity instruments are accounted for as available for sale securities and reported at fair value, determined based on the quoted prices in an active market for identical assets and classified as Level 1 under the Accounting Standards Codification (“ASC”) Topic 825.

During the year ended September 30, 2016, the Company disposed its investment in the common stock of Oando Energy Resources, Inc. (“OER”), a Canadian oil and gas company that trades on the Toronto Stock Exchange (TSX).

During the year ended September 30, 2015, the Company’s investment in the common stock and warrants of OER, a Canadian oil and gas company that trades on the Toronto Stock Exchange (TSX) decreased in value by $457,130 to $211,699. This decrease in value is included as a decrease in stockholders' equity in accumulated other comprehensive income (loss).

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The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.  Furthermore, while ERHC believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.  In determining fair value, the ERHC generally applies the market approach, which uses prices and other relevant data based on market transactions involving identical or comparable assets and liabilities.  There have been no changes in the methodologies used at September 30, 2016 and 2015.

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2016 and 2015, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

September 30, 2016

	Quoted Prices In an Active Market for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)				Total
Derivative liability		$	-		$	-		$	(770,854	)		$	(770,854	)

September 30, 2015

	Quoted Prices In an Active Market for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)				Total
Marketable equity securities - Oando Energy Resources:		$	211,699		$	-		$	-			$	211,699
Derivative liability		$	-		$	-		$	(725,898	)		$	(725,898	)

During the years ended September 30, 2016 and 2015, the Company issued a number of convertible notes payable, and identified derivatives related to these notes. ERHC classifies its derivative liabilities as Level 3 and values them using the methods discussed in Note 5. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed in Note 3 are that of volatility and market price of the underlying common stock of the Company.

As of September 30, 2016, the Company did not have any derivative instruments that were designated as hedges.

The derivative liability for the years ended September 30, 2016 and 2015 of $770,854 and 725,898, respectively, classified as level 3.

The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of September 30, 2016:

	Derivative Liability
Balance at September 30, 2015	$	725,898
Increase in derivative value due to issuances of convertible promissory notes		756,717
Decrease in derivative value due to convertible promissory notes converted to common stocks		(959,965	)
Change in fair market value of derivative liabilities on convertible notes due to the mark to market adjustment		248,204
Balance at September 30, 2016	$	770,854

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The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of September 30, 2015:

	Derivative Liability
Balance at September 30, 2014	$	1,021,942
Increase in derivative value due to issuances of convertible promissory notes		1,480,777
Decrease in derivative value due to convertible promissory notes converted to common stocks		(2,907,064	)
Day 1 loss on derivative liabilities		1,024,292
Change in fair market value of derivative liabilities on convertible notes due to the mark to market adjustment		111,849
Change in fair market value of derivative liabilities on tainted warrants due to the mark to market adjustment		(5,898	)
Balance at September 30, 2015	$	725,898

Note 4 – Convertible Debt

The Company had the following convertible debt outstanding at September 30, 2016:

Lender	Date of Agreement	Term (Months)		Annual Interest rate			Outstanding balance		Accrued Interest at Reporting date		Deferred debt origination costs		Discount		Net Convertible Note payable		Note Derivative Liability
JMJ Financial #4	3/9/2016		12		8	%	$	39,416	$	-	$	-	$	37,114	$	2,302	$	74,913
Adar Bay	3/10/2016		12		8	%		32,000		2,000		1,544		22,863		9,593		71,087
Union Capital #4	4/12/2016		12		8	%		50,000		1,732		2,126		-		49,606		-
Auctus Private Equity Fund	4/27/2016		12		10	%		54,250		2,318		1,839		46,757		7,972		137,157
Black Mountain Equities.	5/20/2016		12		8	%		51,500		926		4,131		-		48,295		-
Rock Capital #2	5/26/2016		12		10	%		55,125		529		5,950		-		49,704		-
Crown Bridge Partners	6/2/2016		12		8	%		53,500		1,407		1,678		45,232		7,997		143,932
Toledo Advisors	6/22/2016		12		10	%		63,000		1,726		2,396		59,309		3,021		168,812
LG Capital	8/23/2016		12		8	%		32,000		250				31,033		1,217		43,965
Auctus Private Equity Fund 2	9/22/2016		9		10	%		58,750		119				57,041		1,828		130,988
							$	489,541	$	11,007	$	19,664	$	299,349	$	181,535	$	770,854

The Company had the following convertible debt outstanding at September 30, 2015:

Lender	Date of Agreement	Term (Months)		Annual Interest Rate				Outstanding balance		Accrued interest at Reporting date		Deferred Debt Origination Costs		Discount		Net Convertible Note Payable			Note Derivative Liability
Redwood Fund III	5/15/2014		6		12	%		$	40,000	$	5,918		4,500	$	15,867	$	25,551		$	114,005
Tonaquint, Inc	10/7/2014		12		22	%	(a)		98,177		46,416		15,098		16,700		112,795			128,566
Various	Various								-		-		14,340		-		(14,340	)		-
JMJ Financial #3	10/22/2014		24		5.83	%			8,900		5,556		5,000		11,582		- (2,126)			27,375
LG Capital #2	10/23/2014		12		8	%			23,533		2,500		506		9,398		16,129			52,628
Cardinal Capital Group	11/6/2014		24		22	%	(a)		43,998		30,133		9,333		41,984		22,814			94,158
Rock Capital	2/6/2015		12		10	%			23,005		-		5,311		20,351		(2,657	)		67,377
Union Capital #3	2/17/2015		12		8	%			34,500		-		1,500		-		33,000			93,039
Adar Bay #2	2/19/2015		12		8	%			12,000		-		3,500		11,742		(3,242	)		39,280
LG Capital #3	3/10/2015		12		8	%			52,500		-		2,622		43,388		6,490			109,470
								$	336,613	$	90,523	$	61,710	$	171,012	$	194,414		$	725,898

During the years ended September 30, 2016 and 2015, the Company issued an aggregate of 18,220,277 and 20,633,744 shares of common stock for conversion of convertible debts of $487,083 and $1,728,370; a gain of $56,020 and $0, and decrease in derivative value due to conversion of $959,965 and $2,474,418, respectively.

(a) During the year ended September 30, 2015, the note was defaulted due to insufficient authorized common share to fulfill conversion request, additional interest accrual recorded due to interest rate increased to 22% from 12% related to the default.

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The following table summarizes conversion terms of the notes outstanding at September 30, 2016:

Lender	Date of Agreement	Term Of Conversion	Eligible for Conversion
JMJ Financial	March 9, 2016	Conversion Price shall be lesser of $0.06 or 60% of lowest trade price in the 25 trading days previous to conversion.	180 after the effective dates
Adar Bay	March 10, 2016	Conversion price shall equal be 50% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future, for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company.	On effective date
Union Capital	April 12, 2016	Conversion Price for each share of Common Stock equal to 40% of the lowest closing bid price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company (provided such Notice of Conversion is delivered by fax or other electronic method of communication to the Company after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day closing price)".	180 after the effective date
Auctus Private Equity Fund, LLC	April 27, 2016	Conversion Price shall equal the lesser of (i) 55% multiplied by the lowest Trading Price (as defined below) (representing a discount rate of 45%) during the previous twenty-five (25) Trading Day period ending on the latest complete Trading Day prior to the date of this Note and (ii) the Variable Conversion Price	On effective date
Black Mountain Equities, Inc.	May 20, 2016	Conversion Price shall equal 60% of the lowest trade occurring during the twenty (20) consecutive Trading Days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part of this Note, subject to adjustment as provided in this Note.	150 after the effective date
Rock Capital	May 26, 2016	Conversion Price for each share of Common Stock equal to 50% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer agent	180 after the effective date

Crown Bridge Partners LLC	June 2, 2016	Variable Conversion Price shall mean 50% multiplied by the Market Price (as defined herein)(representing a discount rate of 50%). “Market Price” means the lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date.	On effective date
Toledo Advisors LLC	June 22, 2016	Conversion Price for each share of Common Stock equal to 50% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the  twenty prior trading days	On effective date
LG Capital	August 23, 2016	Conversion price shall equal be 60% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future, for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company.	On effective date
Auctus Private Equity Fund 2	September 22, 2016	Conversion Price shall equal the lesser of (i) 55% multiplied by the lowest Trading Price (as defined below) (representing a discount rate of 45%) during the previous twenty-five (25) Trading Day period ending on the latest complete Trading Day prior to the date of this Note and (ii) the Variable Conversion Price	On effective date

The following table summarizes conversion terms of the notes outstanding at September 30, 2015:

Lender	Date of Agreement	Term Of Conversion	Eligible for Conversion
Redwood Fund III	May 15, 2014	Conversion Price shall be 55% of the lowest traded price, determined on the then current trading market for the Company’s common stock, for 20 trading days prior to conversion.	180 after the effective dates
JMJ Financial	October 22, 2014	Conversion Price shall be lesser of $0.06 or 60% of lowest trade price in the 25 trading days previous to conversion.	180 after the effective dates
Tonaquint, Inc	October 7, 2014	Conversion price shall be 65% (the “Conversion Factor”) of the lowest intra-day trade price of Borrower’s common stock (“Common Stock”) in the twenty-five (25) Trading Days immediately preceding the Conversion .	180 after the effective date
LG Capital #2	October 23, 2014	Conversion price shall be 50% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future, for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company.	180 after the effective date
Cardinal Capital Group	November 6, 2014	Conversion price shall equal the lesser of (a) $0.05 or (b) 60% of the lowest trade occurring during the twenty five (25) consecutive Trading Days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part of this Note, subject to adjustment as provided in this Note.	180 after the effective date
Rock Capital	February 6, 2015	Conversion price shall equal be 55% of the lowest closing bid price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company (provided such Notice of Conversion is delivered by fax or other electronic method of communication to the Company after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day closing price).	180 after the effective date
Union Capital	February 17, 2015	Conversion price shall equal be 55% of the lowest closing bid price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company (provided such Notice of Conversion is delivered by fax or other electronic method of communication to the Company after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day closing price).	180 after the effective dates
Adar Bay	February 19, 2015	Conversion price shall equal be 50% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future, for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company.	180 after the effective date
LG Capital #3	March 10, 2015	Conversion price shall equal be 60% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future, for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company.	180 after the effective date

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Note 5 – Derivative Liabilities

As described in Notes 3 and 8, the Company has identified embedded derivatives in notes payables and outstanding warrants.

The fair value of the embedded derivatives related to the convertible notes payable, comprising conversion feature with the reset provisions and the default provisions, at issuance and September 30, 2016 and 2015 was determined using the multinomial lattice models that value the derivative liability based on a probability weighted discounted cash flow model.  These models are based on future projections of the various potential outcomes and utilize the following assumptions:

· The stock price would fluctuate with the Company projected volatility;

· The Derivative Convertible Notes convert at 40%  to 60%  of the market prices;

· An event of default would occur initially 0% of the time, increasing 1.00% per month until it reaches 10%;

· The projected volatility curve for each valuation period was based on the historical volatility of the Company, ranging between 200% and 260%;

· The Company would redeem the notes initially 0% of the time, and increase monthly by 1.00% to a maximum of 5.00%;

· The holders of the notes would automatically convert the notes at the maximum of two times the conversion price if the Company is not in default, with the target conversion price dropping as maturity approaches; and

· The Holder would convert the note early after 0-90-180 days and at maturity if the registration was effective and the Company was not in default.

As discussed in Note 4, the Company issued convertible notes payable that provide for the issuance of convertible notes with variable conversion provisions. The conversion terms of the convertible notes are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Due to the fact that the number of shares of common stock issuable could exceed the Company’s authorized share limit, the equity environment is tainted and all additional convertible debentures and warrants are included in the value of the derivative. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion option and warrants and shares to be issued were recorded as derivative liabilities on the issuance date.

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Note 5 – Derivative Liabilities, continued

The fair value of the embedded derivatives related to the tainted outstanding warrants, comprising exercise feature with the full ratchet reset, at September 30, 2016 and 2015 was determined using the lattice models that value the derivative liability based on a probability weighted discounted cash flow model.  These models are based on future projections of the various potential outcomes and utilize the following assumptions:

· The stock price would fluctuate with the Company projected volatility;

· The stock price would fluctuate with an annual volatility. The projected volatility curve for each valuation period was based on the historical volatility of the Company, ranging between 101% and 103%;

· The Holder would exercise the warrant as they become exercisable at target prices of two timesthe higher of the projected reset price or stock price;

· The Warrants with the $0.355; $0.28; and $0.275 exercise prices are fixed and not projected to adjust; and

· The Feltang Warrants expired in the period ending September 30, 2014 without being exercised.

The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date and to fair value as of each subsequent reporting date which at September 30, 2016 and 2015 was an aggregate of $770,854 and $725,898, respectively.

During the years ended September 30, 2016 and 2015, the Company recorded an aggregate loss of $248,204 and $105,951 on change in fair value of derivative liabilities and $394,661 and $1,024,292 day 1 loss on embedded derivative upon recognition of these derivatives, respectively. See Note 2 for more information.

46

Note 6 – Oil and Gas Properties and Concession Fees

Following is an analysis of the cost of oil and gas properties and concession fees at September 30, 2016 and 2015:

	2016		2015
DRSTP concession	$	2,271,600	$	3,113,795
Chad concession		2,800,600		2,800,600
United States oil and gas properties		510,000		-
Pending concessions in other African countries		101,619		101,619
	$	5,683,819	$	6,016,014

Republic of Kenya Concession Fees and Other Financial Commitments

On June 28, 2012, ERHC entered into a production sharing contract ("PSC") with the Government of the Republic of Kenya for certain onshore hydrocarbon exploration and production of Block 11A located in northwestern Kenya.

ERHC is also committed under the PSC to:

a. pay surface fees of $60,000 per year and annual training fees of $175,000 per year during the initial exploration term of two years that started in the first quarter of 2013,

b. spend at least $10,250,000 over the first two years on a minimum work program, and an additional $30,000,000 in each of the following two periods of two years each.

In October 2015, the Company reached an agreement with Kosmos Energy (NYSE: KOS), a leading independent oil and gas exploration and production company focused on frontier and emerging areas to transfer all ERHC's rights to Block 11 of the Săo Tomé and Principe Exclusive Economic Zone (EEZ) to Kosmos. The agreement has been approved by the National Petroleum Agency of Sao Tome & Principe ("ANP-STP") as required in the requisite Production Sharing Contract ("PSC") for EEZ Block 11. The purchase price for the assigned interest consist of a fixed sum in the amount of $2.5 million signing fee, plus reimbursement for verifiable cost paid by the Company prior to July 1, 2015 subject to maximum amount of $1.5 million.  In connection with this agreement, the Company received $4,000,000 and recognized a gain of $2,727,805 of reimbursement of exploration costs incurred during the six months ended March 31, 2016.

In October, 2013, the Company entered into a farm-out agreement with CEPSA Kenya Limited, an affiliate of Compañía Española de Petróleos, S.A.U., an international oil and gas company ("CEPSA"). Under the terms of this agreement, the Company assigned and transferred 55% of its participating interest in Kenya Block 11A to CEPSA. Pursuant to the agreement, the Company received farm-in fee of $2,000,000, reimbursement of $2,175,966 of exploration costs incurred, and recovery of capitalized concession costs of $555,642 for the year ended September 30, 2015. In connection with this farm-out, the Company recognized a gain of $239,515 during the years ended September 30, 2015.

In exchange for the transferred rights, CEPSA will carry the Company's proportionate share of obligations and financial costs under the terms and conditions outlined in the farm-out agreement. The agreement was approved in January 2014 by the Kenyan Government and from February 2014, CEPSA took over from ERHC as operator under the production sharing contract ("PSC") for Kenya Block 11A.

· As of September 30, 2016, the Company was $8,876,853 in arrears of part of its proportionate share of drilling expenses for Kenya Block 11A and therefore in default from May 2016 of its obligation to CEPSA. The drilling expenses are for the Tarach-1 exploratory well which was completed on Kenya Block 11A in summer 2016.

· The Tarach-1 well was always designed as an exploratory well. An exploratory well is drilled purely for information gathering (“exploration”) purposes in an area that is yet unproven with regard to petroleum resources. The site selection for an exploratory well is based on seismic data and other pre-drill geoscientific surveys.

· Operator analysis of the results if the Tarach-1 well shows that it did not encounter any reservoirs. The operator has therefore classified Tarach-1 a dry well. The well has accordingly been plugged and abandoned

Republic of Chad Concession Fees and Other Financial Commitments

On June 30, 2011, ERHC entered into a production sharing contract ("PSC") with Chad for certain onshore hydrocarbon exploration and development.  In September 2013, the Ministry of Energy and Petroleum of Chad approved ERHC’s application to voluntarily relinquish two of the three Blocks covered by the PSC.

The following is an analysis of the costs paid or incurred at September 30, 2016 and 2015:

	2016		2015
Signature bonus	$	2,000,000	$	2,000,000
Advisers’ and ancillary costs related to the PSC		320,600		320,600
Legal fees and costs for the drafting and negotiation of the PSC, as provided in PSC		480,000		480,000
	$	2,800,600	$	2,800,600

47

ERHC is also committed under the PSC to:

a. spend at least $15,000,000 over the first five years on a minimum work program and at least an additional $1,000,000 over a further period of up to three years

b. incur surface fees of $16,360 per calendar year during the first validity period starting on July 12, 2012, and lasting for up to eight years.   Surface fees for subsequent periods will depend on the exploration progress as well as on the acreage retained by ERHC.

Sao Tome Concession

In April 2003, the Company and the DRSTP entered into an Option Agreement (the “2003 Option Agreement”) in which the Company relinquished certain financial interests in the JDZ in exchange for exploration rights in the JDZ.   The Company additionally entered into an administration agreement with the Nigeria-Sao Tome and Principe JDA.   The administration agreement is the formal agreement by the JDA that it will fully implement ERHC’s preferential rights to working interests in the JDZ acreage as set forth in the 2003 Option Agreement and describes certain procedures regarding the exercising of these rights.   However, ERHC retained under a previous agreement the following rights to participate in exploration and production activities in the EEZ subject to certain restrictions:   (a) the right to receive 100% working interest signature free bonus of two blocks of ERHC’s choice and (b) the option to acquire up to a 15% paid working interest in up to two additional blocks of ERHC’s choice in the EEZ.   The Company would be responsible for its proportionate share of exploration and exploitation costs in the EEZ blocks.

The following represents ERHC’s current rights in the JDZ and EEZ blocks:

Block	ERHC Original Participating Interest		ERHC Joint Bid Participating Interest		Participating Interest(s) Transferred		Current ERHC Retained Participating Interest		Remaining Cost Allocated to Blocks
JDZ 2		30.00%		35.00%		43.00%		22.00%	$	-
JDZ 3		20.00%		5.00%		15.00%		10.00%		-
JDZ 4		25.00%		35.00%		40.50%		19.50%		-
JDZ 5		15.00%		-		-		15.00% (in arbitration)		567,900
JDZ 6		15.00%		-		-		15.00% (in arbitration)		567,900
JDZ 9		20.00%		-		-		20.00%		567,900
EEZ 4		100.00%		-		-		100.00%		567,900

The Original Participating Interest is the interest granted pursuant to the Option Agreement, dated April 2, 2003, between DRSTP and ERHC (the “2003 Option Agreement”).

Under the terms each of the Participation Agreements Sinopec and Addax agreed to pay all of ERHC’s future costs for petroleum operations (“the carried costs”) in respect of ERHC's retained interests in JDZ blocks 2,3 and 4. Additionally, Sinopec and Addax are entitled to 100% of ERHC’s allocation of cost oil plus up to 50% of ERHC’s allocation of profit oil from the retained interests on individual blocks until Sinopec and Addax Sub recover 100% of ERHC’s carried costs.

The remaining $2,271,600 and $3,113,795 of cost related to the DRSTP concession, as shown on the Company's balance sheet at September 30, 2016 and 2015, respectively, relate to blocks 5, 6 and 9 of the JDZ, and the Company's EEZ blocks. Production Sharing Contracts are yet to be signed on block 4. As of September 30, 2016, blocks 5 and 6 are in arbitration (see Note 10).

United States Oil and gas properties

In September 2016, NewStar, a wholly- owned subsidiary of ERHC made its first acquisition, with purchase price of $510,000, of a small producing oil and gas well in Ganado, Jackson County, Texas. NewStar applied for and was granted an Operatorship License by the Texas Railroad commission.

Note 7 – Income Taxes

The composition of deferred tax assets and the related tax effects at September 30, 2016 and 2015 are as follows:

	2016			2015
Net operating losses	$	15,013,370		$	10,932,812
Allowance for loss on deposits		-			1,443,651
Other		753,211			1,702,196
Total deferred tax assets		15,766,581			14,078,659
Valuation allowance		(15,766,581	)		(14,078,659	)
Net deferred tax asset	$	-		$	-

48

The difference between the income tax benefit (provision) in the accompanying statement of operations and the amount that would result if the U.S. Federal statutory rate of 34% were applied to pre-tax loss for years ended September 30, 2016 and 2015, is as follows:

	2016			2015
Income tax benefit at federal statutory rate	$	4,095,932		$	2,254,677
Change in valuation allowance		(1,687,922	)		(3,408,739	)
Expiration and adjustment of NOLs		(2,400,742	)		1,019,766
Stock compensation		-			(2,856	)
Other		(7,268	)		137,152
	$	-		$	-

In preparing the Company’s consolidated financial statements, the Company assesses the likelihood that its deferred tax assets will be realized from future taxable income.   The Company establishes a valuation allowance if it determines that it is more likely than not that some portion of the deferred tax assets will not be realized. Changes in the valuation allowance, when recorded, would be included in its consolidated statements of operations as a provision for (benefit from) income taxes.   The Company exercise significant judgment in determining its provisions for income taxes, its deferred tax assets and liabilities and its future taxable income for purposes of assessing its ability to utilize any future tax benefit from its deferred tax assets. During 2016, the Company assessed the need for a valuation allowance against its deferred tax assets.   The deferred tax asset valuation allowance was $15,766,581 as of September 30, 2016. The valuation allowance relates primarily to the net operating losses and various expense deductions for which a tax benefit is currently unavailable.

At September 30, 2016, the Company has Federal net operating loss carry forward of approximately $44,156,971. The federal loss carry forward expires on various dates through 2036.

Uncertainty in Tax Positions

On October 1, 2007, the Company adopted the guidance related to accounting for uncertainty in income taxes, which provides a financial statement recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return.   Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position.   The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.   ASC 740 also provides guidance on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and income tax disclosures.

The Company is subject to taxation in the United States and various foreign jurisdictions. Management has determined that the Company has no uncertain tax positions requiring recognition under ASC 740 as of September 30, 2016 and 2015.

Note 8 – Shareholders’ Equity

Common Stock

During the year ended September 30, 2016, 43,660 fractional shares issued to shareholders due to reverse split effective on January 5, 2016.

During the years ended September 30, 2016 and 2015, the Company issued 0 and 2,100 shares common stocks and recognized compensation expense of $0 and $8,400, respectively, related to service granted to the Board of Directors.

During the years ended September 30, 2016 and 2015, the Company issued an aggregate of 18,220,277 and 20,633,744 shares of common stock for conversion of convertible debts of $487,083 and $1,728,370; and recognized a gain on conversion of $56,020 and $0, and decrease in derivative value due to conversion of $959,965 and $2,474,418, respectively.

During the years ended September 30, 2016 and 2015, the Company issued of 0 and 928,254 shares of common stock to its related party for conversion of convertible debts of $0 and $250,000 and decrease in derivative value due to conversion of $0 and $432,646, respectively.

49

Stock Options

On January 6, 2012, the Board of Directors granted a total of 47,500 stock options to officers and board of directors members of the Company under the Company’s 2004 Stock Option Plan. The options vest over two years, are exercisable for a period of 2 years and have a $20 strike price. However, the options are only exercisable if the Company’s share price reaches $75 per share and remains consistently at or above that level for a period of one month.   They have a grant-date fair value of $63,711 or $13 per share based on and independent valuation of the options using a lattice model and the following weighted average assumptions:

Risk free interest rate	0.25	%
Dividend yield	0.00	%
Annual volatility	105.97	%
Exit/Attrition rates	2.00	%
Target exercise multiple	2.14	%

During the years ended September 30, 2016 and 2015, the Company recognized compensation expense of $0 and $6,957, respectively, related to the options grant as described above.   As of September 30, 2016 and 2015, there are 0 and 41,500, respectively fully-vested options outstanding; none of which are exercisable.

Stock Warrants

On October 6, 2010, an equivalent of 68,182 warrants with a term of 5 years and an exercise price of $28 were issued to the investors along with the common shares sold.   ERHC also issued to the placement agent a total of 4,596 warrants which have an exercise price of $27.5 and a term of approximately 5 years.   At September 30, 2016, all warrants were expired.   During the years ended September 30, 2016 and 2015, 68,182 and 4,596 warrants expired unexercised, respectively.

Stock Warrants Summary

Information regarding warrant, their respective changes and their weighted average exercise prices as of and for the fiscal years ended September 30, 2016 and 2015 are as follows:

Description	Warrants		Weighted Average Exercise Price		Market Price Intrinsic Value
Balance at September 30, 2014		72,778	$	28		-
Granted		-
Exercised		-
Expired or cancelled		4,596
Balance at September 30, 2015		68,182	$	28		-
Granted		-
Exercised		-
Expired or cancelled		68,182	$	28
Balance at September 30, 2016		-				-

There was no unrecognized compensation cost for the above warrants as of September 30, 2016 and 2015.

Note 9 – Related Party Transactions

At September 30, 2016 and 2015, the Company had director compensations payable of $100,438 and $46,250, respectively, to non-employee directors.

On February 17, 2015, the Company entered into a convertible debt agreement with Chrome Oil Services, Limited, significant shareholder, for a principal amount of $250,000 with interest rate at 8% for 12 months. The debt is convertible into securities of the Company at a conversion price calculated as fifty five percent (55%) of the lowest trade price in the twenty (20) trading days previous to the conversion date. On February 19, 2015, the debt was converted into 928,254 shares of common stock and the Company recognized resolution of derivative liability of $432,646 in APIC conversion.

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Note 10 – Commitments and Contingencies

Republic of Kenya Concession Fees and Other Financial Commitments

On June 28, 2012, ERHC entered into a production sharing contract ("PSC") with the Government of the Republic of Kenya for certain land based hydrocarbon exploration and production of Block 11A located in northwestern Kenya.

In October, 2013, the Company entered into a farm-out agreement with CEPSA Kenya Limited, an affiliate of Compañía Española de Petróleos, S.A.U., an international oil and gas company ("CEPSA"). Under the terms of this agreement, the Company assigned and transferred 55% of its participating interest in Kenya Block 11A to CEPSA. In exchange for the transferred rights, CEPSA will carry the Company's proportionate share of obligations and financial costs under the terms and conditions outlined in the farm-out agreement. The agreement was approved in January 2014 by the Kenyan Government and from February 2014, CEPSA took over from ERHC as operator under the production sharing contract ("PSC") for Kenya Block 11A.

· As of September 30, 2016, the Company was $8,876,853 in arrears of part of its proportionate share of drilling expenses for Kenya Block 11A and therefore in default from May 2016 of its obligation to CEPSA. The drilling expenses are for the Tarach-1 exploratory well which was completed on Kenya Block 11A in summer 2016.

· The Tarach-1 well was always designed as an exploratory well. An exploratory well is drilled purely for information gathering (“exploration”) purposes in an area that is yet unproven with regard to petroleum resources. The site selection for an exploratory well is based on seismic data and other pre-drill geoscientific surveys.

· Operator analysis of the results if the Tarach-1 well shows that it did not encounter any reservoirs. The operator has therefore classified Tarach-1 a dry well. The well has accordingly been plugged and abandoned

Republic of Chad Concession Fees and Other Financial Commitments

On June 30, 2011, ERHC entered into a production sharing contract ("PSC") with Chad for certain onshore hydrocarbon exploration and development.   In September 2013, the Ministry of Energy and Petroleum of Chad approved ERHC's application to voluntarily relinquish two of the three Blocks covered by the PSC.

As of September 30, 2016, ERHC has paid or incurred:

a. $2,000,000 as the entire signature bonus

b. $320,600 in advisers' and ancillary costs related to the PSC

c. $480,000 as legal fees and costs for the drafting and negotiation of the PSC, as provided for in the PSC

d. $190,872 as costs of Environmental Impact Study, as provided for in the PSC

e. $448,000 on Aeromagnetic data acquisition survey, in fulfilment of work program obligations under the PSC

f. $378,374 2014/2015 Training and Surface rental Fess, as provided in the PSC

Insurance recovery for loss on Certificates of Deposit

During the years ended September 30, 2010 and 2009, the Company recognized losses on certificates of deposit of $1,058,579 and $4,234,317 to record the certificates at their estimated net realizable basis, based on the fact that certain restrictions were placed on the investment and a receiver was appointed to take over the institution and the Company had filed an insurance claim for recovery of these losses. During the years ended September 30, 2016 and 2015, the Company recovered $0 and $1,046,862, respectively from its loss on certificate of deposit.

Legal Proceedings

JDZ BLOCKS 5 AND 6

Arbitration and Lawsuit

Lawsuit

The Company's rights in JDZ Blocks 5 and 6 are currently the subject of legal proceedings at the London Court of International Arbitration and the Federal High Court in Abuja, Nigeria. The Company instituted both proceedings in November 2008 against the JDA and the Governments of Nigeria and Săo Tomé and Príncipe.   The Company seeks legal clarification that its rights in the two Blocks remain intact.

The issue in contention is contractual. The Company was awarded a 15 percent working interest in each of the Blocks in a 2004/5 bid/licensing round conducted by the JDA following the Company's exercise of preferential rights in the Blocks as guaranteed by contract and treaty.   The JDA and the Government of STP contend that certain correspondence issued by a previous CEO/President of the Company in 2006 amount to a relinquishment of the Company's rights in Blocks 5 and 6 under the Company's contracts with STP which provide for the rights.   The Company contends that no such relinquishment has occurred and has sought recourse to arbitration accordingly. It also filed the suit to prevent any tampering with its said rights in JDZ Blocks 5 and 6 pending the outcome of arbitration.

Proceedings on the suit and the arbitration are currently suspended while the Company pursues amicable settlement with the Governments of Nigeria and Săo Tomé & Príncipe.

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Routine Claims

From time to time, ERHC may be subject to routine litigation, claims, or disputes in the ordinary course of business.   ERHC intends to defend these matters vigorously; the Company cannot predict with certainty, however, the outcome or effect of any of the litigation or investigatory matters specifically described above or any other pending litigation or claims.   There can be no assurance as to the ultimate outcome of these lawsuits and investigations.

Operating Lease

ERHC leases office space at 5444 Westheimer Road, Houston, Texas.   The lease for office space expires July 31, 2017.   The lease calls for monthly base rent payments of $9,825 for approximately 5,200 square feet.   During the years ended September 30, 2016 and 2015, ERHC incurred lease expenses of $129,470 and $117,895, respectively.   The future remaining annual minimum lease payments under this lease are as follows:

Year Ended September 30,	Amount
2017	$	110,968
2018		-
	$	110,968

The Company also leases various office spaces located outside of the United States with terms ranging from 6 months to 6 years. Total rent expense under these leases for the years ended September 30, 2016 and 2015 amount to $87,045 and $159,177, respectively.

Note 11- Investment in Oando Energy Resources

During the year ended September 30, 2016, the Company’s investment in the common stock of Oando Energy Resources, Inc. (“OER”), a Canadian oil and gas company that trades on the Toronto Stock Exchange (TSX) was purchased by the majority shareholder of OER, pursuant to a shareholder approved buyout. As a result, the Company recognized and recorded a loss on available for sales securities of $844,521; received cash proceed of $502,906 and reclass $1,135,728 unrealized gain on available for sale equity securities in 2016.

Note 12 – Federal Income Tax Payable

During the year ended September 30, 2016, the Company restated its financial statements for the years ended September 30, 2015 and 2014 due to the Internal Revenue Service disallowing certain deductions on ERHC’s 2006 tax return.  The disallowance resulted from stock based compensation expense that the Company had recognized as a deductible expense in its 2006 tax return. The disallowance was the outcome of an Internal Revenue Service audit of ERHC’s 2006 return and the Company recorded a tax payable of $2,739,607. The Company is currently pursuing a reduction of its tax liability through statutory means as outlined in the Internal Revenue Code.  At this point in the process, the IRS has not yet responded to the Company.  As is standard, the lien that exists whenever a taxpayer owes taxes assessed to the Department of the Treasury, has been formally recorded. 

Note 13 – Subsequent Events

During the three months ended December 31, 2016, JMJ Financial converted all principle balance plus accrual interest of $46,082 into 106,982,333shares of the Company’s common stocks.

During the three months ended December 31, 2016, Adar Bay converted all principle balance plus accrual interest of $75,025 into 95,357,668 shares of the Company’s common stocks.

During the three months ended December 31, 2016, Auctus Private Equity Fund, LLC converted debt amount of $29,405 into 162,099,000 shares of the Company’s common stocks.

During the three months ended December 31, 2016, Union Capital converted debt amount of $95,025 into 242,671,379 shares of the Company’s common stocks.

During the three months ended December 31, 2016, Rock Capital converted debt amount of $5,160 into 34,400,000 shares of the Company’s common stocks.

During the three months ended December 31, 2016, Toledo Advisors ,LLC converted debt amount of $5,262 into 52,621,900 shares of the Company’s common stocks.

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

We have established disclosure controls and procedures to ensure that material information relating to ERHC Energy, including its consolidated subsidiaries, is made known to the officers who certify ERHC’s financial reports and to other members of senior management and the Board of Directors.

Based on their evaluation, ERHC’s principal executive and principal financial officers have concluded that ERHC’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were ineffective as of September 30, 2016 to ensure that the information required to be disclosed by ERHC in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. Our officers also concluded that our disclosure controls and procedures are ineffective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

Management of ERHC is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act). ERHC’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

Management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of ERHC’s internal control over financial reporting as of September 30, 2016. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on this evaluation, management, with the participation of the Chief Executive Officer and Chief Financial Officer, concluded that, as of September 30, 2016, our internal control over financial reporting was ineffective.

We noted the following deficiencies that we believe to be material weaknesses.

(i) The Company’s system of internal controls failed to identify multiple journal entries that were identified by the Company’s external auditor.

Our conclusion related to the effectiveness of our controls is based solely on adjustments made by our external auditor as part of their yearend audit and not based upon any other control deficiencies within the entity.

Changes in Internal Control Over Financial Reporting

There were no changes in ERHCs internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended September 30, 2016, that have materially affected, or are reasonably likely to materially affect, ERHC’s internal control over financial reporting.

Item 9B. Other Information

None.

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PART III

Item 10. Directors and Executive Officers of the Registrant and Corporate Governance

The following are the Directors and Principal Executive Officer of the Company as of September 30, 2016:

Name	Age	Position
Howard Jeter	69	Director
Andrew Uzoigwe	73	Director
Friday Oviawe	54	Director
Peter C. Ntephe	49	Director, President and Chief Executive Officer

Ambassador (rtd.) Howard F. Jeter

Ambassador Jeter is the former interim President and CEO of the Leon H. Sullivan Foundation. He has also served as Executive Vice President of GoodWorks International, LLC, an international consulting firm focused on business facilitation and investment promotion for Africa and the Caribbean. A former career diplomat, Ambassador Jeter served for 27 years in the American Foreign Service and retired from the U.S. State Department with the rank of Career Minister.   Ambassador Jeter was U.S. Ambassador to Nigeria, to the Republic of Botswana, and also served as Deputy Assistant Secretary of State for African Affairs, Director of West African Affairs, and Special Presidential Envoy to Liberia.   Other diplomatic postings held by Ambassador Jeter include   Namibia, Lesotho, Tanzania, and Mozambique. Ambassador Jeter holds a BA in Political Science from Morehouse College, a MA in International Relations and Comparative Politics from Columbia University, and a MA in African Studies from UCLA. He is a member of Phi Beta Kappa, the American Foreign Service Association,   the Council on Foreign Relations, and the American Academy of diplomacy. Ambassador Jeter is a former Chairman of the U.S. Export-Import Bank’s Advisory Committee on Africa and a member of the Board of Directors of Africare and the Morehouse College Global Leadership Center.   For the past two years, Ambassador Jeter has served as Chair of the Selection Panel for the Rangel Fellowship Program, a collaborative program administered by the State Department and Howard University and Senior Advisor to University of Denver’s International Career Advancement Program.   Ambassador Jeter has received numerous awards and recognition for his work and service, including a Presidential Meritorious Award, State Department Superior Honor Awards, Senior Foreign Service Performance Awards, the Rainbow/Push Coalition International Peace and Justice Award, and the prestigious Bennie Trailblazer Award from Morehouse College.

Andrew Uzoigwe, Ph. D

Dr. Uzoigwe retired from Nigerian National Petroleum Corporation (“NNPC”), in 2002, where he served as the Group Executive Director (Exploration & Production), from 1999 until 2002.   Prior to that position he served as Managing Director of NNPC’s subsidiary companies, Warri Refining and Petrochemicals Company and Eleme Petrochemicals Company Ltd.   During his long tenure at NNPC, Dr. Uzoigwe also held several senior technical and management positions including Chief Engineer and Project Coordinator (Petrochemicals), and Group General Manager (R&D Division), prior to becoming a Managing Director of NNPC’s subsidiary companies.   He started his career with Dow Chemical Company where he held various senior positions in its Walnut Creek Research Center and in its Specialty Chemicals Facility in Pittsburg, California. Dr. Uzoigwe has also served on the Governing Boards of the Raw Material Research and Development Council and the     National Emergency Management Agency. Dr. Uzoigwe is a Registered Professional Mechanical Engineer and a Registered Professional Chemical Engineer in the State of California. He is a fellow of the Nigerian Society of Chemical Engineers and a Fellow of the Polymer Institute of Nigeria. He holds a Bachelor’s of Science in Mechanical Engineering and an MBA from the University of California at Berkeley. He also holds a MS and a Doctorate in Petroleum/Chemical Engineering from Stanford University California.

54

Friday Oviawe, CPA

Mr. Friday Oviawe is the Managing Partner/CEO of Jackson Friday CPA, LLC (“the Firm”). He has over 25 years of professional audit and accounting experience.   The Firm is involved in providing tax, audit and accounting services to small and medium-sized companies.   Prior to establishing the Firm, Mr. Oviawe worked at BDO, Seidman, LLP as a Senior Audit Manager in General Audit Services.   Before joining BDO Seidman, Friday Oviawe was a Manager in the New York office of McGladrey & Pullen, LLP where he provided audit and business advisory services to middle market companies in both the private and public sectors and not-for-profit organizations including A-133 Audits. Before joining McGladrey & Pullen, Mr. Oviawe spent over six years with Mitchell & Titus, LLP.   At Mitchell & Titus, he provided audit and business advisory services to fortune 500 companies as well as small and medium-sized companies.   Mr. Oviawe is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants (AICPA). Mr. Oviawe is a Chartered Accountant as well as a Chartered Banker.   In addition, he holds Bachelors and Master’s Degrees in Finance from University of Nigeria, Nsukka and University of Lagos, Nigeria, respectively.

Peter Ntephe, Ph. D

Peter Ntephe was appointed Chief Executive Officer and elected Director of ERHC Energy in April 2010. He has been involved in the Company’s executive management, in various capacities, since 2001. His roles have included fundamental participation in the negotiation, securing and maintenance of all the Company’s oil and gas interests in sub-Saharan Africa. As Chief Executive Officer, he oversees the executive management of ERHC Energy and its subsidiaries, ensuring that the group’s strategic objectives are met. Under Dr. Ntephe’s leadership, the Company has more than doubled the size of acreage under its control and expanded its strategic focus to include onshore acreage which is comparatively cheaper and less complicated to explore than deep offshore acreage. The Company has also rapidly grown its in-house technical capabilities, enabling it to directly operate some of its onshore assets in a strategic shift from the non-operator model it previously ran. Dr. Ntephe has had a career spanning 26 years. In addition to his PhD from the University of London, he holds five other degrees including a Master of Science from the University of Oxford, a Master of Laws from the University of London and a Master of Science (Management) from the Brunel University, London. Dr. Ntephe has previously taught as adjunct faculty in the Business School of the American Intercontinental University, London. He is a member of the Association of International Petroleum Negotiators (AIPN) and the Committee on Oil and Gas Law of the International Bar Association.

Sylvan Odobulu, Vice President (Administration) and Controller

Sylvan Odobulu was promoted to Vice President - Administration in January 2012. He has been involved in the Company’s executive management as a Financial Officer and Controller from 2006 until 2011. Mr. Odobulu is responsible for identifying and developing new Sub-Saharan African indigenous upstream oil and gas interests and business opportunities through mergers and acquisitions. He played a leadership role in executing the successful Production Sharing Contract negotiations of ERHC’s portfolio assets in the Republic of Chad. He is an expert in local acquisition activities, management of government stakeholders and the integration of all development exploration activities at the regional level. In his role as Vice President - Administration, Mr. Odobulu is responsible for corporate wide treasury, human resource and internal controls. As Principle Accounting Officer, Mr. Odobulu is responsible for regulatory and disclosure compliance including preparation of financial statements and other requisite disclosure documents. Prior to joining ERHC and since 1999, Mr. Odobulu was employed by Ernst and Young LLP, serving in various capacities, most recently as an Accounting Supervisor. He holds a Master of Business Administration from Rice University's  Jones Graduate School of Business, and a Bachelor of Science degree from the University of North Texas, majoring in Accounting. Mr. Odobulu is a member of the  Association of International Petroleum Negotiators  (AIPN) and Petroleum Accountants Society of Houston  (PASH)

Compensation of Directors

The Company's Directors’ compensation program is designed to enhance the Company's ability to attract and retain highly qualified Directors and to align their interests with the long-term interests of the Company's shareholders. The program consists of both a cash component, designed to compensate independent Directors for their service on the Board and its Committees, and an equity component, designed to align the interests of independent Directors and shareholders.

The number of stock awards granted to each director during years prior to the 2012 fiscal year was determined by reference to the awards in an equal amount that would yield thirty to fifty percent of total compensation of each director.   Stock awards in 2013 and 2012 were consistent in number of shares with 2011 and yielded reduced compensation based on a reduction in the Company's share price. In 2010 and 2009, based on the recommendations of Compensation Committee, the Company increased total compensations for Directors for serving on the Board. Stock awards to Directors are restricted shares under Rule 144 of the Securities Act of 1933, but they include no conditions for vesting.

On January 6, 2012, the Board of Directors granted a total of 3,000,000 stock options to directors of the Company under the Company’s 2004 Stock Option Plan.   The options vest over two years, are exercisable for a period of 2 years and have a $0.20 strike price.   However, the options are only exercisable if the Company’s share price reaches $0.75 per share and remains consistently at or above that level for a period of one month.   During the second quarter of fiscal 2013, 600,000 options with a total amortized value of $4,023 were forfeited upon resignation of one of the directors of the Company.

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Cash Compensation - During 2016, the basic annual cash retainer paid to each Director (other than the Board Chairman) was $20,000.     Each Board member is paid a meeting fee of $1,500 per Board meeting attended.

The Chairman of the Audit Committee is paid an annual retainer of $10,000.   The Chairman of the Compensation Committee is paid an annual retainer of $5,000.   The Chairman of the Governance and Nominating Committee is paid an annual retainer of $5,000.   Each member of the Audit Committee is paid an annual retainer of $3,125.   Each member of the Compensation Committee is paid an annual retainer of $2,500.   Each member of the Governance and Nominating Committee is paid an annual retainer of $2,500.   In addition, each member of a Committee is paid a meeting fee of $1,500 per Committee meeting attended.

The following table sets forth information concerning total director compensation during the 2016 and 2015 fiscal years for each non-employee director as follow:

Name	Fees Earned or Paid in Cash		Stock Awards		Option Awards		Non-Equity Incentive Plan Compensation		Change in Pension Value and Nonqualified Deferred Compensation Earnings		All Other Compensation		Total
2016
Howard Jeter	$	36,625	$	-	$	-	$	-	$	-	$	-	$	36,625
Andrew Uzoigwe		36,625		-		-		-		-		-		36,625
Friday Oviawe		38,500		-		-		-		-		-		38,500
Peter Ntephe		10,000		-		-		-		-		-		10,000
2015
Howard Jeter	$	38,125	$	-	$	-	$	-	$	-	$	-	$	38,125
Andrew Uzoigwe		38,125		-		-		-		-		-		38,125
Friday Oviawe		40,000		-		-		-		-		-		40,000
Peter Ntephe		26,000		-		-		-		-		-		26,000

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GRANTS OF PLAN-BASED AWARDS

No rule 144 awards were made to the Company’s directors in 2016.

It is expected that the directors will receive compensation in fiscal 2016.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

The following table reflects all outstanding equity awards held by the Company’s directors as of September 30, 2016:

Name	Option Awards									Stock Awards
	Number of Securities Underlying Unexercised Options				Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (2)		Option Exercise Price ($)		Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
	Exercisable		Unexercisable (1)
Peter Ntephe		—		525,000		75,000		0.20	1/6/2022		—		—		—		—
Howard Jeter		—		525,000		75,000		0.20	1/6/2022		—		—		—		—
Friday Oviawe		—		525,000		75,000		0.20	1/6/2022		—		—		—		—
Andrew Uzoigwe		—		525,000		75,000		0.20	1/6/2022		—		—		—		—

(1) The number in this column reflects the rule 144 options awarded in 2012 pursuant to the 2004 Plan that have vested, but are not exercisable due to other factors.

(2) The number in this column reflects the rule 144 options awarded in 2012 pursuant to the 2004 Plan that have not vested as of September 30, 2016.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s Directors and Executive Officers, and persons who own beneficially more than ten percent (10%) of the common stock, to file reports of ownership and changes of ownership with the Securities and Exchange Commission.   Copies of all filed reports are required to be furnished to the Company.   Based solely on the reports received and the representations of the reporting person, the Company believes that these persons have complied with all applicable filing requirements during the fiscal year ended September 30, 2016.

Corporate Governance

The Board of Directors has adopted a Code of Ethics to govern the conduct of all of the Officers, Directors and employees of the Company.   In addition, the Board has adopted Charters for its Governance and Nominating Committee, Audit Committee and Compensation Committee.   The Code of Ethics and Committee Charters, along with ERHC’s FCPA Policy and Whistleblower Protection Policy, can be accessed on the Company’s website www.erhc.com.

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Director Independence

The Company’s Board of Directors is required to have a majority of independent directors and has adopted director independence guidelines based upon and as defined in the NASDAQ listing standards. The Company is not listed on NASDAQ and is not subject to the rules of NASDAQ but applies the rules established by NASDAQ to establish director independence.   The Company’s Board of Directors periodically analyzes the independence of each director and has determined that the following directors meet the standards of independence under our Corporate Governance Guidelines and director independence guidelines, including that each member is free of any relationship that would interfere with his or her individual exercise of independent judgment: Messrs.   Jeter, Uzoigwe, and Oviawe. No Director is deemed independent unless the Board affirmatively established his independence.

Audit Committee

The Company’s Audit Committee is constituted of Messrs. Oviawe (Chair), Jeter, and Uzoigwe.   The ultimate responsibility for good corporate governance rests with the Board, whose primary role is oversight, counseling and direction to the Company's management in the best long-term interests of the Company and its stockholders. The Audit Committee, in accordance with its charter, has been established for the purpose of overseeing the accounting and financial reporting processes of the Company and audits of the Company's annual financial statements. As described more fully in its charter, the purpose of the Audit Committee is to assist the Board in its general oversight of the Company's financial reporting, internal controls and audit functions.   Management is responsible for the preparation, presentation and integrity of the Company's financial statements; establishing and applying accounting and financial reporting principles; designing and implementing systems of internal controls; and establishing procedures designed to reasonably assure compliance with accounting standards, applicable laws and regulations. The Company's independent auditing firm is responsible for performing an independent audit of the consolidated financial statements in accordance with generally accepted auditing standards. In accordance with law, the Audit Committee has ultimate authority and responsibility to select, compensate, evaluate and, when appropriate, replace the Company's independent auditors. The Audit Committee has the authority to engage its own outside advisers, including experts in particular areas of accounting, as it determines appropriate, apart from counsel or advisers hired by management. All of the members of the Audit Committee meet the independence and experience requirements of the SEC. The Board of Directors determined that Mr. Oviawe qualifies as an “Audit Committee Financial Expert” as defined by the SEC.

The Audit Committee members are not professional accountants or auditors, and their functions are not intended to duplicate or to certify the activities of management and the independent auditors, nor can the Audit Committee certify that the independent auditors are “independent” under applicable rules. The Audit Committee serves a Board-level oversight role, in which it provides advice, counsel and direction to management and the auditors on the basis of the information it receives, discussions with management and the auditors, and the experience of the Audit Committee's members in business, financial and accounting matters. Stockholders should understand that the designation of “an Audit Committee Financial Expert” is an SEC disclosure requirement related to Mr. Oviawe’s experience and understanding with respect to certain accounting and auditing matters.   The designation does not impose on Mr. Oviawe any duties, obligations or liability greater than generally imposed on them as members of the Audit Committee and the Board, and this designation as an Audit Committee Financial Expert pursuant to this SEC requirement does not affect the duties, obligations or liability of any other member of the Audit Committee or the Board.

Item 11. Executive Compensation

Compensation Discussion and Analysis

The following discussion and analysis of compensation arrangements of our named executive officers should be read together with the compensation tables and related disclosures set forth below. This discussion contains forward-looking statements that are based on our current plans, as well as considerations, expectations and determinations regarding future compensation programs. Actual compensation programs that we adopt may differ materially from currently planned programs as summarized in this discussion.

Overview

ERHC’s current business activity is to exploit its assets, which are rights to working interests in exploration acreage in the Republic of Kenya, the Republic of Chad, the JDZ between the DRSTP, and Nigeria and in EEZ of Sao Tome and Principe.   The Company current business plan is based on attracting and retaining a limited group of highly qualified professionals. ERHC and its subsidiaries had 9 full-time employees at September 30, 2016.

At this time in our development, it is critical to retain and motivate our current employees, as well as attract new talented personnel to the Company, in order to continue to work on the implementation of our business plan. The Company offers a competitive compensation and benefits package to enable us to recruit new employees and retain our current employees. The same benefits are generally available to each of our employees regardless of position.

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Compensation Philosophy and Objectives

Our executive compensation program and objectives are based on our need to attract and retain executives with the talent and experience necessary for ERHC to achieve its goal of fully developing its assets. ERHC competes with large energy companies that have substantially greater resources.   Therefore, the Company must provide a total compensation package that is sufficiently competitive to attract and retain the required executive personnel. In determining a total compensation package, the Company does not rely on benchmarking to determine total compensation or any material element of compensation. Because we are a developing company, we sometimes use a combination of equity and cash as a compensation incentive. Our compensation and benefits include:

· a base salary rate typically targeted at a level that is competitive in our market as determined by the Compensation Committee,

· other equity awards, including equity grants to new hires to attract talented personnel and occasional grants of options/restricted shares to retain our talented employees, and

· a comprehensive benefits package.

Since 2004, the equity portion of annual incentives has been paid primarily in restricted Company common stock. The incentive amount is generally converted to shares based on the closing price of the Company’s common stock on the date of grant.

Compensation Consultant

Each year, the Compensation Committee, working with independent compensation experts, evaluates the compensation earned by executive officers to assess if it is reasonable and adequate to retain the services of those executive officers and recommends to the Board of Directors appropriate compensation for the Named Executive Officers.   The Board reviews such recommendations and then adopts compensation for the upcoming year.   As the Company grows, it intends to explore more complex procedures for evaluating and fixing compensation for its executive officers.

Role of Compensation Committee and Executive Officers in Compensation Decisions

The Compensation Committee has the responsibility to review and approve annual compensation, including the competitiveness of the total compensation package, for the Chief Executive Officer and the Vice President (Administration) and Controller (collectively, the “Executive Officers”). The Compensation Committee endeavors to provide a compensation package for the Executive Officers that they believe is reasonable and competitive. Generally, the components of compensation provided to our Executive Officers are similar to those provided to our general employee population.

Base salaries, annual incentives and other equity awards for the Executive Officers are based on comparative industry salary produced by compensation consultant hired by the Committee. The Compensation Committee makes the final determination as to base salaries, annual incentives and equity awards for each of the Executive Officers based on Company performance and executive performance and their understanding of the employment market.

2016 Executive Compensation

Base Salaries

Base salaries for our Executive Officers and other employees are designed to be comparable to like positions in the marketplace from where we recruit. These competitive salaries are proposed by the Compensation Committee based on their familiarity with the current market for employees with similar qualifications.

Equity Awards

Overview

We may grant restricted stock, stock options and other equity-based awards to employees, consultants and non-employee directors under our 2004 Plan. As previously mentioned, our annual grants of equity awards are tied to the achievement of our annual performance objectives. Equity awards are also used for new hire incentives. We do not have a formal policy for the timing of granting equity awards but do not time equity awards to increase the economic value of the award to plan participants.

The Board has authorized the Compensation Committee to act on behalf of the Board in granting equity-based awards, including restricted stock and stock options, to eligible employees and consultants (other than Executive Officers).

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We do not currently intend to grant stock or stock options except under limited circumstances, including stock awards granted to a director upon his or her initial election to the Board. Under the provisions of the 2004 Plan, stock awards or stock options cannot be granted at an exercise price of less than the closing price of a share of the Company’s common stock as reported on NASDAQ on the date of grant of such stock options. All equity grants to Executive Officers must be approved by the Compensation Committee or a subcommittee thereof. Stock options or stocks granted to members of the Board must be approved by the Compensation Committee.

Retention Plan

The Company does not have a formal retention plan in place.

Perquisites

Perquisites are not provided to our officers.

Benefits

We provide the same level of benefits to all of our employees and Executive Officers.

Accounting and Tax Implications

Our 2004 Plan is designed to grant stock awards that are performance-based compensation expense that is fully deductible for federal income tax purposes. When the awards vest or are otherwise includible in the taxable compensation of the affected executives, we may not be able to recognize current or future tax benefits that may otherwise be available to the Company related to such awards. We began expensing equity awards in 2006 in accordance with guidance issued by the Financial Accounting Standards Board. In general, the accounting rules did not impact the types of equity awards granted to plan participants.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K.

THE COMPENSATION COMMITTEE

Dr. Andrew Uzoigwe-Chairman

Ambassador Howard Jeter-Member

Mr. Friday Oviawe –Member

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SUMMARY COMPENSATION TABLE

The following table sets forth the aggregate compensation awarded to, earned by or paid to the Company’s named executive officers for 2016 and 2015:

		Salary		Bonus		Stock Awards Authorized and Issued		Stock Awards Authorized Unissued		Option Awards		Non-Equity Incentive Plan Compensation		Change in Pension Value and Nonqualified Deferred Compensation Earnings		All Other Compensation		Total
Name and Principal Position	Year	($)		($)		($)		($)		($)		($)		($)		($)		($)
Peter Ntephe (1)
Chief Executive Officer	2016		236,000		—		—		—		—		—		—		—		236,000
	2015		236,000		—		—		—		—		—		—		—		236,000
Sylvan Odobulu (2)
Vice President -   Administration & Controller	2016		180,000		—		—		—		—		—		—		—		180,000
	2015		180,000		—		—		—		—		—		—		—		180,000

(1) Mr. Ntephe is contracted through ERHC’s holding company, ERHC Energy Cayman Limited and is paid a salary of $236,000 per year for his services as CEO. Stock awards and other compensation were awarded for his service as a director from April 2010 when he was elected to the board.

(2) Mr. Odobulu joined the Company in July 2006 as controller and is the Principal Accounting Officer. He was promoted to Vice President – Administration in January 2012, at which time his salary was increased from $162,000 to $180,000 per year.

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GRANTS OF PLAN-BASED AWARDS

No rule 144 awards were made to the Company’s executive officers in 2016.

It is expected that the executive officers will receive compensation in fiscal 2016.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table reflects all outstanding equity awards held by the Company’s named executive officers as of September 30, 2016:

	Option Awards											Stock Awards
Name	Number of Securities Underlying Unexercised Options				Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (2)		Option Exercise Price ($)		Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
	Exercisable		Unexercisable (1)
Peter Ntephe		—		875,000		125,000		0.20	1/6/2022		—		—		—		—
Sylvan Odobulu		—		656,250		93,750		0.20	1/6/2022		—		—		—		—

(1) The number in this column reflects the rule 144 options awarded in 2012 pursuant to the 2004 Plan that have vested, but are not exercisable due to other factors.

(2) The number in this column reflects the rule 144 options awarded in 2012 pursuant to the 2004 Plan that have not vested as of September 30, 2016.

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OPTION EXERCISES AND STOCK VESTED

During fiscal 2016, no stock options were exercised by the Company’s named executive officers and no restricted stocks vested.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

As of September 30, 2016, Company has entered into two employment or other agreements that include a change of control severance provisions with an executive officer, including the named executive officers. The Company’s employment agreements provide that certain officers are eligible for payments upon any termination without cause prior to expiration of the contract as described below under Employment Contracts.

Employment Contracts

The following is an analysis of the Company’s employment contracts with named executive officers at September 30, 2016:

Employee	Position	Date of Agreement   Commencement	Date of Agreement Termination	Term of Agreement	Monthly/Annual Compensation		Estimated Cost if Triggering Event Occurred at September 30, 2015
Peter Ntephe	President and Chief Executive Officer	4/22/2015	4/21/2017	2 years	$	19,667 /236,000	$	472,000
Sylvan Odobulu	Vice President – Administration and Controller	7/3/2015	7/2/2017	2 years	$	15,000 /180,000	$	360,000

The above contracts contain the following (among other provisions):

An extension provision that at any time before the expiration of the primary term of the agreement that it may be renewed upon mutual agreement on the same terms and conditions contained in the current agreement herein or on such other terms and conditions as the Company and the employee mutually agree.

The employee's status as an employee of the Company terminates immediately and automatically upon the earliest to occur of: (i) his death or “Disability", (ii) his/her discharge by the Company "For Cause", (iii) his/her termination by the Company by notice or, (iv) the expiration, without renewal, of the employment term. Termination of the employment agreement with cause results in the Company having no further responsibility under the agreement.

For termination without cause for reasons of bankruptcy, insolvency, dissolution or liquidation of the Company, the Company is obligated to the employees for all amounts due during the remaining term of the employment agreement in either a lump sum or in the current monthly amounts for the remaining term together with all unpaid benefits awarded or accrued up to the date of termination.

If the employee is terminated without cause for other reasons, he/she is entitled to:

· Within one month of commencement, 3 months of base salary

· After 1 month but before 12 months – 12 months of base salary

· After 12 months – 24 months of base salary

Annual paid vacation ranging from four to five weeks.

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Relocation allowance in the event that the terms of employment require the employee to relocate from his or her city or country of residence.

Incentive compensation as approved by the Company's Board of Directors.

Mr. Ntephe became Chief Operating Officer (and began acting as interim Chief Executive Officer) in April 2008. In April 2010, Mr. Ntephe was appointed Chief Executive Officer and Executive Director.   Mr. Ntephe is contracted in that capacity through ERHC’s holding company, ERHC Energy Cayman Limited.

Mr. Odobulu was employed by the Company in July 2006 and was placed under contract as shown above.

Securities Authorized for Issuance Under Equity Compensation Plans

In November 2004, the Board of Directors adopted a 2004 Compensatory Stock Option Plan pursuant to which it reserved 20,000,000 shares for issuance.   This plan was approved at a special meeting of the stockholders of the Company in February 2005.   Under this plan, 14,681,756 shares have been authorized.

	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) (c)
Equity compensation plans approved by security holders		4,150,000		0.20		5,318,244
Equity compensation plans not approved by security holders		-		-		-

Compensation Committee Interlocks Insider Participation

The Company’s Compensation Committee is comprised Messrs. Uzoigwe (Chair), Jeter and Oviawe.   None of the members of the Compensation Committee has been or is an officer or employee of the Company, or is involved with a related transaction or a relationship as defined by Item 404 of Regulation S-K.   None of the Company’s Executive Officers serves on the Board of Directors or compensation committee of a company that has an Executive Officer that serves on the Company’s Board or Compensation Committee.   No member of the Company’s Board is an Executive Officer of a company in which one of the Company’s Executive Officers serves as a member of the Board of Directors or compensation committee of that company.

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth the ownership of the Company’s common stock as of September 30, 2016 by (i) each of the Company’s current Directors, (ii) the Company’s two most highly compensated officers as of the last fiscal year end, or September 30, 2016 (collectively, the “named executive officers”); (iii) each person who, to the Company’s knowledge, beneficially owns more than 5% of outstanding shares of the Company’s common stock; and (iv) all of the Company’s current Directors and named Executive Officers, as a group. As of December 31, 2016 there were 952,399,512 shares of common stock issued and outstanding.

To the Company’s knowledge, except as otherwise indicated in the footnotes to this table and subject to applicable community property laws, each shareholder named in the table has sole voting and investment power with respect to the shares set forth opposite such shareholder’s name.

Name and Address	Amount and Nature of Beneficial Ownership (1)						Percent of Class (1)
> 5% Shareholders:
Chrome Oil Services LTD (Sir Emeka Offor) c/o No 22 Lobito, Wuse II Abuja, Nigeria		2,931,111	(2	)				6.23	%
Chrome Energy, LLC (Sir Emeka Offor) c/o No 22 Lobito Crescent, Wuse II, Abuja, Nigeria.		1,033,057	(2	)				2.20	%
Sir Emeka Offor 228B Muri Okunola ST, PO Box 71898 Victoria Island Lagos, Nigeria		4,006,218	(2	)	(3	)		8.52	%
Directors and Named Executive Officers:
Peter Ntephe, President and Chief Executive Officer (4)		650,837						*
Sylvan Odobulu, Controller (4)		804,642						*
Howard Jeter, Director (4)		10,833						*
Friday Oviawe, Director (4)		5,467						*
Dr. Andrew Uzoigwe, Director (4)		11,133						*
All directors and named executive officer as a group (5 persons) (4)		1,482,962						3.20	%

* Less than three percent.

(1) At September 30, 2016, a total of 47,045,164 shares of our Common Stock were issued and outstanding.

(2) Represents shares indirectly owned by Sir Emeka Offor, as a result of his ownership of, and exercise of voting and investment control over, each of Chrome Oil Services, Ltd. and Chrome Energy, LLC.

(3) Includes 42,050 shares owned directly by Sir Emeka Offor.

(4) Address c/o ERHC Energy, Inc., Suite 1440, 5444 Westheimer Road, Houston, TX 77056.

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Item 13. Certain Relationships and Related Transactions

Review, Approval or Ratification of Transactions with Related Persons

The Audit Committee of the Company is responsible for reviewing, approving or ratifying related party transactions, including any related-party transaction that the Company would be required to disclose pursuant to Item 404 of Regulation S-K promulgated pursuant to the rules and regulations of the SEC.

Policy

The Audit Committee, which consists solely of independent Directors, must review all “Related Person Transactions” as defined by Item 404 of Regulation S-K of the rules promulgated by the SEC. The Audit Committee will approve a Related Person Transaction only if it determines that the Related Person Transaction is consistent with the business interests of the Company. In considering the Related Person Transaction, the Committee will consider all relevant factors, including as applicable: (i) the Company’s business rationale for entering into the Related Person Transaction; (ii) whether the Related Person Transaction is on terms comparable to those available to third parties, or in the case of employment relationships, to employees generally; (iii) the potential for the Related Person Transaction to lead to an actual or apparent conflict of interest and any safeguards imposed to prevent such actual or apparent conflicts; and (iv) the overall fairness of the Related Person Transaction to the Company.

Procedure

Directors and executive officers are responsible for bringing a potential Related Person Transaction to the attention of the Chair of the Audit Committee.

Transactions in 2016 and 2015

None

Item 14. Principal Accounting Fees and     Services

Aggregate fees for professional services rendered by the auditors for the fiscal years ended September 30, 2016 and 2015, were as follows:

	2016		2015
Audit fee	$	62,500	$	62,000
Tax fees		5,750		5,750
	$	68,250	$	67,750

Audit fees for the fiscal years ended September 30, 2016 and 2015 represent the aggregate fees billed for professional services rendered for the audit of the Company’s annual financial statements and review of financial statements included in its quarterly reports on Form 10-Q or services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years.

Tax fees for the fiscal year ended September 30, 2016 and 2015, represents the aggregate fees billed for professional services rendered for tax compliance, tax advice, and tax planning.

Audit Committee Pre-Approval Policies and Procedures

The Audit Committee on an annual basis reviews audit and non-audit services performed by the independent auditor.   All audit and non-audit services are pre-approved by the Audit Committee, which considers, among other things, the possible effect of the performance of such services on the auditors’ independence.   The Audit Committee has considered the role of M&K CPAS, PLLC in providing services to us for the fiscal year ended September 30, 2016 and has concluded that such services are compatible with M&K CPAS’s independence as the Company’s auditors.

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PART IV

Item 15. Exhibits and Financial Statement Schedules and Reports on Form 8-K

(32)Consolidated Financial Statements and Schedules:

1. Consolidated Financial Statements:   See Index to Consolidated Financial Statements immediately following the signature pages of this report.

2. Consolidated Financial Statement Schedule: See Index to Consolidated Financial Statements immediately following the signature pages of this report.

3. The following documents are filed as exhibits to this report:

EXHIBIT NO.	IDENTIFICATION OF EXHIBIT
Exhibit 3.1*	Articles of Incorporation
Exhibit 3.2*	Bylaws
Exhibit 4.1*	Specimen Common Stock Certificate.
Exhibit 4.2*	Form of Amended and Restated 12% Convertible Promissory Note, dated effective January 2001.
Exhibit 4.3*	Form of Amended and Restated 5.5% Convertible Promissory Note, dated effective January 2001.
Exhibit 4.4*	20% Convertible Promissory Note, dated January 31, 2001, in favor of Chrome.
Exhibit 4.5*	Term Loan Agreement, dated February 15, 2001, by and between Chrome and ERHC.
Exhibit 4.6*	Senior Secured 10% Exchangeable 10% Convertible Promissory Note, dated January 31, 2001, in favor of Chrome.
Exhibit 4.7*	Form of Warrant entitling Chrome to purchase common stock of the Company, exercise price of $0.40 per share.
Exhibit 10.1*	Option Agreement, dated April 7, 2003, by and between the Company and the Democratic Republic of Sao Tome and Principe (incorporated herein by reference to Exhibit 10.1 of Form 8-K filed April 2, 2003)
Exhibit 10.2*	Management and Administrative Services Agreement by and between Chrome Oil Services, Ltd. And the Company. (Incorporated by reference to Form 10-KSB filed September 24, 2001).
Exhibit 10.4*	Letter Agreement, dated November 29, 2004, by and between the Company and Chrome (incorporated herein by reference to Exhibit 10.1 of Form 8-K filed December 29, 2004).
Exhibit 10.5*	Promissory Note, dated December 15, 2004, made by the Company in favor of Chrome (incorporated herein by reference to Exhibit 10.2 of Form 8-K filed December 29, 2004).
Exhibit 10.6*	Promissory Note, dated December 15, 2004, made by the Company in favor of Chrome (incorporated herein by reference to Exhibit 10.3 of Form 8-K filed December 29, 2004).
Exhibit 10.7*	Employment Agreement with Ali Memon.
Exhibit 10.8*	Audit committee charter
Exhibit 10.9*	Employment Agreement with James Ledbetter
Exhibit 10.10*	May 21, 2001 Memorandum of Agreement made b/w DRSTP and ERHC
Exhibit 10.11*	March 15,   2003 Memorandum of Agreement made b/w DRSTP and ERHC
Exhibit 10.12*	April 2, 2003 Option Agreement b/w DRSTP and ERHC
Exhibit 10.13*	Administrative Agreement b/w Nigeria/DRSTP and ERHC
Exhibit 10.14*	Block 2 Participation Agreement March 2, 2006 b/w ERHC, Addax and Sinopec
Exhibit 10.15*	Block 2 Participation Agreement August 11, 2004 b/w ERHC and Pioneer
Exhibit 10.16*	Block 3 Participation Agreement   February 16, 2006 b/w ERHC and Addax
Exhibit 10.17*	Block 4 Participation Agreement November 17, 2005 b/w ERHC and Addax
Exhibit 10.18*	Block 4 2nd Amendment to Participation Agreement March 14, 2006
Exhibit 10.19*	Block 4 3rd Amendment to Participation Agreement July 14, 2006

Exhibit 10.20*	Employment Agreement with Sylvan Odobulu
Exhibit 10.21*	Employment Agreement with David Alan Bovell
Exhibit 10.22*	Employment Agreement with Peter Ntephe
Exhibit 10.23*	Summary of Production Sharing Contract between the Republic of Chad and ERHC, dated June 30, 2011
Exhibit 10.24*	Novation of the Production Sharing Contract between the Republic of Chad and ERHC dated November 18, 2013 and a Decree of the President of the Republic of Chad dated September 24, 2013
Exhibit 31.1	Certification Pursuant to 18 U.S.C Section 1350, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2	Certification Pursuant to 18 U.S.C Section 1350, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1	Certification Pursuant to 18 U.S.C Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2	Certification Pursuant to 18 U.S.C Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Previously filed

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SIGNATURES

In accordance with the Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on January 19, 2017, on its behalf by the undersigned, thereunto duly authorized.

ERHC Energy Inc.
By:	//s//Peter Ntephe
	Peter Ntephe
	President and   Chief Executive Officer
	//s//Sylvan Odobulu
	Sylvan Odobulu
	Principal Accounting Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
//s//   Howard Jeter	Director	January 19, 2017
Howard Jeter	Member Audit Committee
//s//   Andrew Uzoigwe	Director	January 19, 2017
Andrew Uzoigwe	Member Audit Committee
//s//   Friday Oviawe	Director	January 19, 2017
Friday Oviawe	Chairman Audit Committee

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